Young people just starting out on their financial journey can learn a lot from the money regrets of older people.

Research commissioned by Sanlam that interviewed more than 5 000 South Africans, found that more than half would advise their young selves to think of money as an asset to grow, rather than a resource to spend.

This is hardly surprising. Most older people will tell you they wish they had saved more because they want more money today. But someone saying they wish they had saved more doesn’t really help a younger person to navigate their finances.

It may be more useful to understand what regrets a person has in terms of money they spent. Any decision to spend now means less money in the future – but we still need to live today.

So how do we decide what is worth spending money on today and what we should rather not spend on in order to have enough money for the future? My question is: “What did you spend your money on that was just not worth it in hindsight? What were your major money regrets?”

If I reflect on my finances, I have made some bad decisions along the way. My biggest financial mistake was buying a bigger house which we didn’t really need. It was a “renovator’s dream” and it cost us a lot of money in running costs. When we bought the house I was warned by several older friends not to do it. They had “been there, got the t-shirt”. But I didn’t listen.

I asked my followers on social media to share their money regrets in the hope that some younger person reads this, learns from others’ mistakes, and applies their wisdom.

Common money regrets

The new car

Buying a car you cannot afford came up as one of the most common money regrets. Yet this remains the biggest financial mistake most young people make. It has significant financial implications, but for some reason the idea of a new car switches off that part of our brain that is saying “you cannot afford this!”

As Hoosain wrote “I bought a new car I could not afford but I wanted” and Amelia says she wished she had bought a house or shares instead of a new car. For Lesley, buying a new car every three to four years had a very negative effect on her finances.

Too many clothes, especially on credit

Clothes and store cards came up frequently as a regret.  “Clothes. You don’t need that many clothes!” wrote Lulama. This is true. There are many items of clothing in my cupboard I have only worn once. I land up going back to my regular clothes that I am comfortable in.

And I agree with Lesley who wrote “way too many clothes, too much junk for the kids and house. You don’t need half the stuff you think you must have.”

If you do a grand clear-out of anything you have not used in the last 12 months, you will be amazed at how much junk you have. The biggest complaint about too many clothes is that it is mostly bought with store cards and many people would advise their younger self not to take out store accounts.

Too much debt

Like store cards and car finance, debt came up as a major regret for many people. As Nhlakanipho wrote, “it’s mostly taking unnecessary debts. Learn to be patient. Save for something you need instead of buying it on credit.”

Justine would have told her younger self not to get into debt. “It took me 10 years to get out of debt,” she says. “Also teach your kids to never put anything in their name for anyone else ‒ partners and family included. I find banks need to be clearer with student loans.”

The thing with debt is understanding “good debt” and “bad debt”. Although Justine was unhappy about a student loan, if it allowed her to study then that can be good debt, as long as you understand the terms and conditions.

Buying a home, or even a car you can afford, often requires credit. The debt that lands people in trouble is consumption debt. That is buying clothes on a store card or using your credit card to buy things you probably don’t need, with money you clearly don’t have – or you would not have to use the credit card!

The great thing about avoiding debt is that it is easy to do. Just commit to never having a store card, overdraft, or credit card (unless you keep a low balance on your credit card limit and pay it off in full eah month).

Day-to-day spending regrets

For Mr T, “reckless spending of money by eating at restaurants regularly” is his biggest money regret after that expensive car, while takeaways was another culprit for people like Ntokozo.

A few people said they wished they had spent less on alcohol, and Zinzi calculated that her son is currently spending nearly R2 000 a month on cigarettes and marijuana.

Imagine if he invested the R2 000 instead, and then, as Jacques suggested, put a 10% escalation on his investments. In ten years’ time he would have R600 000. I have no doubt that in ten years’ time he would rather have the money than have smoked all those cigarettes and weed!

Day-to-day spending like eating out at restaurants and drinking with friends can really add up. There’s nothing wrong with enjoying yourself, but consider committing some of that money to a regular investment and maybe eating out one less time a month.

Leave your investments

If Zinzi manages to convince her son to invest in his future rather than ruin his health, she then needs to convince him not to tap into that money.

As Mittah wrote about lessons to his younger self, “I wouldn’t have withdrawn all my savings policies every three to four years”. The power of compounding is something you only truly understand after at least five years of investing. That is when you start to see the true growth. If you keep cashing in, your money never gets to work for you.

Key findings of the Sanlam survey

• The majority of respondents in every life stage said they would advise their younger self to ‘think of money as an asset to grow, not a luxury to spend’.
• ‘Enjoy your money, you only live once’, came in as the lowest recommendation for younger selves across the board.
• But reality looks a lot different: the top two financial concerns across all life stages are making ends meet and paying off debt.
• From age 50 until retirement, the biggest concern after making ends meet, is retiring comfortably.
• Just 10.3% of 18- to 24-year-olds surveyed have a retirement product, and only 17.6% in the 25 to 29 age group have a retirement product. Unfortunately, this means the vast majority are not taking advantage of compound interest and tax breaks linked to saving for retirement.
• Only 7.2% of the retired respondents say that they had felt well prepared to retire. Unless people are encouraged to act early, the outcomes for future retirees are unlikely to improve.
• Overall, 41.3% of respondents have life insurance; under half of 40- to 44-year-olds (49.4%) and 45- to 49-year-olds (47.8%) have life insurance.
• Providing for education, leaving a legacy, and even being able to buy property came in as a lower priority across all age groups than paying off debt and making ends meet. This indicates that South Africans are living largely on the back foot, rather than being focused on financial provision for aspects of life that build wealth and success.
• 3% of all respondents don’t have a financial adviser. Younger people (18- to 39-year-olds) use the internet as their main source of advice, whereas those older than 40 get financial advice mainly from an adviser.

This article first appeared in City Press.