How to minimise your financial regrets (and start taking action)
Regrets don't have to be a bad thing. Here's how you can reframe them and move forwards with a growth mindset.
đ Welcome to the latest issue of How To Money by Kate Campbell â the newsletter that talks about all those money things you wish you learnt in high school.
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Dear How To Money Reader,Â
When I speak to people getting started investing, one of the most common things I hear is the regret that they didnât know about the idea of investing and compound interest 5, 10 or 20 years earlier, and even more than that, taking action on this knowledge. Â
Itâs tough to stare at the numbers on a compound interest calculator and see what difference 10 or 20 years could have made on your investing journey.Â
But itâs much more important to focus on the knowledge and resources before you and maximise the time you do have.
Jeff Bezos famously said, âI knew that if I failed, I wouldnât regret that, but I knew the one thing I might regret is not ever having triedâ.
Making financial decisions involves a lot of uncertainty, and itâs rare that we can ever get our decisions just right.
But, if you approach your finances with a perfectionist mentality, youâll probably never take that first step.
So how can we minimise those feelings of regret regarding our finances that can hold us back from moving forward?
Here are five different strategies that have been helpful for me:
1) Start taking action NOW
When I feel like I miss the boat on something or get annoyed at my past self for not doing XYZ, I try to turn those feelings into action.
I canât change past Kateâs decision, but I most certainly can do something about the choices present Kate makes.
Turn those feelings into action today.
Set up your savings account, go to the accountant and deal with your taxes, finally take the time to hunt down your lost super, open that emergency fundâŚyou get the gist.
Start building the financial future that you want right now.
2) Reflect on the way you make decisions
If your goal is to minimise the number of regrets you have at the end of your life, itâs essential to use this as a lens when making financial decisions.
Project yourself forward into the future, and look back on the decision youâre about to make.
How do you think youâll feel? What might some of the flow-on consequences of your decision be? How would you feel in the future if you changed your mind or didnât take action?
Use this information to guide your decision-making and act accordingly.Â
Itâs also important to remember that many of your life decisions are not final. You donât make a choice now and are stuck with the results of that decision forever.
Just because you decide to invest in a particular ETF or use a specific broker today doesnât mean youâre not allowed to change your mind tomorrow.
As you learn more about yourself and build your financial confidence, the decisions you make regarding your finances will change and evolve - and thatâs natural.
Remember, you can change your mind.
3) Set yourself up for success
Iâm a big fan of goal setting and vision boards because these tools help us to get clear on our goals and prioritise the order in which we work towards them.
Hereâs what you can do đ
Brainstorm all your goals on an A4 piece of paper.
Sort these goals into decade buckets: 20s, 30s, 40s, 50s, etc.
Pick one short-term, one medium-term and one long-term goal to focus on right now. (Or pick one goal and work backwards from it.)
Not only will doing this help reduce your regrets long-term, but when youâre looking back in 1, 3, 5 and 10 yearsâ time, youâve got a record of what was important to you at the time.
Itâs not fair to get upset at yourself for not achieving something that wasnât even a priority for you in the first place.
â Want to create a vision board? Itâs less about arts and crafts and more about what you want. Tune into this episode as my co-host on the Australian Finance Podcast, Owen talks you through how he created his vision board.
4) Sometimes youâve just got to spend it
Balance in life is tricky.
And itâs even more challenging when you start trying to save, invest and spend your money simultaneously.
Because it forces you to make tradeoffs, spend $100 today for an experience, or invest $100, and you could have over $200 in 10 years.
We might regret not hitting certain financial milestones. But we should also consider the inverse of that.
Will you regret saying "no" to that family dinner or trip away with your friends?
Itâs tough, but sometimes you just have to spend the money.
5) Start talking about money
As they say, you donât know what you donât know.
The more conversations you have with family, friends and colleagues, the more youâll open your eyes to the possibilities around you.
For example: talking about switching to a low-fee super fund might alert your friend that changing super funds is something sheâs allowed to do rather than just sticking with the default employer fund.
You never know what ripple effects these conversations might have.
It will be hard. I wonât sugarcoat it.
But hard doesnât mean itâs the wrong choice.
â Over to you
Spend some time this week thinking about the small actions you can start taking this month to reduce your financial regrets at the end of 2024.
What do you want your finances to look like in 12 monthsâ time?
You can take the first step today.
Cheers to our financial futures,
Kate Campbell
Thanks for reading
Thanks for reading todayâs issue of How To Money. If you enjoyed what you read, Iâd really appreciate it if you could share it with a friend, family member, or colleague who you think might like it too.
⨠If youâd like to support my journey, the best ways are to:
Buy a copy of my book, Buying Happiness: Learn to invest your time and money better through Booktopia*, Amazon or order it through your local library.
Subscribe to my podcast (The Australian Finance Podcast) and leave a review.
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