Friday Finance: our biggest financial regrets

The graph above is based on a 2021 survey.

When the tide goes out, you discover who’s been swimming in the nuddie. It seems that the low tide of our fortunes in 2020 exposed financial errors to many of us.

Let’s pull each apart in turn.

1. Too little emergency savings

2020 was the year emergency savings proved their value. While the year was alright for some, many found themselves out of work through lockdowns and related factors. Your present host was unemployed for two years and counting – can anyone beat that?

In my book, I recommend saving up a 3-month emergency fund for those still paying off non-mortgage debt and 6-12 months for everyone else.

Many would have considered 12 months’ worth a bit nuts but 2020 was my vindication.

You can’t be too careful.

You also can’t keep too much of your money languishing in cash, especially now that interest rates are near zero. If, like me, you’ve decided there’s no harm in turbo-charging your emergency fund for future madness, have a look at my suggestions on how to establish an Apocalyptic Emergency Fund that will not hamper your returns too much.

2. Too little retirement savings

It’s funny this one came in at Number 2 given that the issue was not specific to the turmoil of 2020, but I guess some issues are evergreen.

If you’re young, saving around 15% of your income in a tax-protected retirement fund throughout your career should do the trick. If you’re starting older, you’ll probably have to save more. Choose low-fee index funds and let time do its thing.

The main risk here is putting your head in the sand until you hit 55 and suddenly realizing you’ve left it too long. Be proactive, use a retirement calculator and start figuring out what you need to do.

Remember, saving 60% of what you need is much better than saving 0% of what you need. If you’re already old, social security is likely to be around for a while yet and should be enough to augment whatever you can put together for yourself.

3. Too much credit card debt

This is why ‘Don’t get into (more) debt‘ is Step 1 in the ten steps to financial freedom. If you’re using credit cards or otherwise borrowing irresponsibly, you’re going backwards.

First, stop living on credit. That comes before everything else. Cut your cards if you need to. It is possible to use them profitably but if you have too much debt, perhaps you’d be better off avoiding the dreaded things altogether.

Next, get out of debt. This will be your main project until it’s done.

4. No regrets

I suppose these are the ones who read my book.

5. Too much student loan debt

Oh, no. There’s not much you can do about this one except pay off what you can or hope Papa Biden saves you.

When writing my book, I intended it to be helpful for anyone under 40 with a job. Reading about US student loans, however, I realized that those with 100K in debt and a low income are not going to make it through budgeting and cutting their cards alone. Same with medical debts. What the hell is happening over there.

For young ‘uns or those with kids, avoid useless degrees that incur massive debts like the plague. Don’t fall for the education bubble.

6. Not saving enough for your children’s education

Self-explanatory. Keep in mind that retirement is not your only financial goal. There will also be shorter-term goals like this one, buying a house, purchasing a foreign visa or whatever. Yeah, that’s a new one.

Shares are for investments of a >10Y time horizon, preferably much longer. For an expense a few years away you might consider bonds; for a year or so away you might consider a term deposit/money market account/CD.

Keep in mind number 5 above – is this education going to be worth it?

7. Buying too much house

Not everybody needs a house. It’s primarily for living in, not an investment as such. However, borrowing for a home can be good debt because you can save on rent and resell the house later if you like. For those wanting to settle down, buying a house can make sense from a holistic point of view.

However, it’s still debt and you don’t want too much of it. Buy a house just big enough to fit your family in an area not crackling with gun battles. Anything more will be a mortgage monkey on your back.

What did people not regret?

As the ‘something else’ category is only 4%, we can assume that these seven issues are the main ways people get themselves into financial strife.

Few regretted making long-term investments in index funds, despite the scary bear market of 2020. Nor improving their skills, so long as doing so did not lead to too much debt. There seem to be no regrets about not borrowing enough, nor paying down debt, sticking to a frugal budget or getting good financial advice.

These are the basic steps most likely to bide you over when stormy weather arrives. Follow the ten steps and next time there’s a financial catastrophe, you’ll be in a much better position to cope.


Finance writers in the MSM like to talk breathlessly about how something unprecedented is happening. Don’t believe it – downturns and troubles like 2020 happen regularly, though at unpredictable intervals. The reasons and exact consequences vary but the effect is much the same – the market falls and unemployment rises.

The main short-term risk you need to prepare for is a loss of income. The main long-term risk is to the value of your investments, which can be managed through a combination of time in the market and diversification.

For most, this article merely serves as a reminder.

If the information here is news to you, read this book immediately:

  • This article provides general information. It does not take into account your personal circumstances and is not intended to influence readers’ financial decisions. Get your own, professional advice.


  1. lemmiwinks · February 13

    Two years is brutal, hope you’re on the up and up again.

    Liked by 2 people

  2. Kentucky Gent · February 13

    FYI, love your Friday Finance posts, even though they get the fewest comments. Guess I’m WEIRD that way 🙂

    “Few regretted making long-term investments in index funds, despite the scary bear market of 2020.”

    It took me FOREVER, but I finally learned in the 2018~2019 range, embrace the scary bear markets and BUY BUY BUY during a market crash. Our human natures are tough to overcome.

    My biggest regret (can’t remember if I participated in the 2021 survey) is chasing high-yield stocks. Investors should be extremely selective and choose HIGH QUALITY companies. And I am not talking about ESG quality, but rather quality when it comes to business model moats and earnings growth.

    If you can’t do that, then do what Nikolai tells you to do: Index.

    Liked by 1 person

  3. Kentucky Gent · February 13

    “No worries. I was going to take a year off anyway so it came at the perfect time. As it happens, things are now moving . .”

    You earned good karma in “Equatorial Guinea”, I suppose. Either way, I am glad to read this.

    Liked by 1 person

  4. Liz · February 15

    -Investing (and losing, ultimately) in the tech bubble.
    -Buying a house during the bubble (not as much our fault for the circumstances at the time).
    Both cost us six figures.
    But even so, we’re okay because we didn’t do those other things you mentioned.

    Liked by 1 person

    • Nikolai Vladivostok · February 15

      Re the tech bubble, is it the investing that you regret or the selling during the dip? If you’d held an index fund from then to now you’d be laughing.

      Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s