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Learning Is Cheaper Than Experience

Updated: Jul 5

Most people desperately wish they had a 1UP, or another video game life for their finances. So many of us have created negative financial consequences. Sometimes those consequences last our entire lifetime. If we had it to do over again, we all swear we would do things differently the second time around. Even though I did well, I must say I could have done better with more knowledge, sooner.

As I demonstrated in The Illustrated Guide To Financial Independence, learning is cheaper and less painful than having negative experiences. A great way to gain a big advantage in life is to understand the most common money mistakes and financial regrets people have. This way, you obtain the benefit of experience without the considerable pain of obtaining it.

In survey after survey, most older Americans list one or more financial mistakes as a top life regret. According to the website Money Crashers, a full 80% of all Americans have at least one significant financial regret in their lives—some have more. That is not surprising as money stress is rated as the top stressor in modern life according to CNBC.

The website Student Loan Hero survey named not saving enough money is the #1 financial regret most people have. Whether the problem is saving enough money for life emergencies or not saving enough to invest, failing to save is a critical problem for half of all Americans. For example, according to the daily newspaper The Statesman, half of Americans can’t come even up with an extra $400 to pay an unexpected bill. Your life can be much more satisfying and calmer with an emergency fund or a savings balance.

The second listed financial regret is running-up a large amount of debt. 97% of people who live with debt believe they would be much happier in life if they never created it according to a survey by motley fool.com. Additionally, the website debt.com reported a strong link between unhappiness, depression, and accompanying debt—although they could not say which came first, the depression or the debt.

Not investing is the third most common financial regret in America. According to a survey on MagnifyMoney.com, 77% of Americans strongly regret not learning to invest or not investing sooner. Investing early is an important wealth-building concept. Investing is how we create real wealth in our lives. Investors beat savers in the wealth-building department over time and the longer you are invested, typically the less risky investing becomes.

Now let's talk about the Godzilla of all financial regrets. The most complained about, insidiously evil debt of all time—school debt! anger

Let me be quick to add, before lightning strikes me dead where I stand for criticizing formal education, this same group said they do not regret becoming educated, but this group does regret the massive debt they racked-up to obtain it. According to a survey conducted by Credible.com, the average college debt ($20K to $39K) takes almost 20 years to pay off. Of course it will take longer if you borrow more to obtain a more advanced degree—like up to 30 years to pay off $60K or more. Remember, it is possible to obtain education without school debt. A full 42% of students who get bachelor’s degrees graduate without any student debt according to APLU.org

There are other common financial regrets, but they start becoming variations on the themes we have already covered. For example, there are many statistics about people who regret buying a home for a large purchase price—becoming house poor in the process. This, however, is simply a variation of the “too much debt regret” that so many people have.

What kind of learner are you? Can you learn by studying the experiences of others? I hope so. If you can’t, you will be destined to repeat many mistakes that you could have easily avoided. Some of these expensive lessons could put your life on a negative, downward trajectory that could be hard to turn around. Incorporate this new knowledge into your behaviors and move forward to achieve your financial goals.

~ Larry Faulkner



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