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Understanding Our Regrets Today Can Improve Our Financial Tomorrow

Feelings of regret, especially about financial decisions or inaction, are universal, but it's possible to turn them into life's best positives. (opens in new tab) (opens in new tab) (opens in new tab) Newsletter sign up Newsletter (Image credit: Getty Images) By H. Dennis Beaver, Esq. last updated 12 October 2022 "'Jerry,' my 65-year-old father, is beating himself up over failing to get out of the stock market months ago when it was so high. He is obsessed with making money and now consumed with regret and guilt. He has always been impulsive, not wanting to miss out on a hot stock, and I am afraid now he is vulnerable to making a wrong decision to get back what he lost. Dad is becoming a stranger to the family. We have told him for years to work with a financial adviser, but he is a know-it-all. "Do you know of anything he can read which might help him feel less angry with himself over his decisions and encourage him to work with a financial adviser? Thanks, 'Liz.'"

The 5 Biggest Regrets People Have About Retirement I certainly do. The Power of Regret: How Looking Backward Moves Us Forward by New York Times bestselling author Daniel Pink (published this year), and Your Total Wealth: The Heart and Soul of Financial Literacy by Lyle Sussman and David A. Dubofsky (published last year).

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When I Say the Word Regret What Comes to Mind

Think about some of the things you've regretted and how things today might have been different if what happened back then didn't. Or, if instead of doing something, you held back. Was it that person you so wanted to meet, something - a feeling - came over you that this just might be the one? But you didn't take that step forward, didn't say, "Hi," and instead moved on with your life, wondering, always wondering what might have been? Pink made clear during an interview with me that an understanding of what we regret can open doors to a better, more secure tomorrow - especially in a confused financial world. He describes four categories of regret that are universal - people all over the world have these same regrets that have special applicability to financial planning.Foundation regrets. These are failures to be responsible, conscientious, prudent, and they leave you thinking, "If only I had done the work." A lot of finance- and health-related regrets are in this category.Boldness regrets (inaction). These include opportunities not taken, such as applying to medical school, starting a business, "chasing" a true love. They leave us thinking, "If only I had taken that chance."Moral regrets. These leave you wondering, "If only I had done the right thing."Connection regrets. These regrets happen when we neglect the people who matter to us: "If only I had reached out."

How Being Aware of Our Regrets Helps Us

"Our regrets are a great source of information and part of who we are," Pink says. "They can be helpful when, for example, business leaders say to their teams, 'Here is what I regret about where we are and what we need to discuss.' This candor earns that person respect and positive change for the organization."

Avoiding Financial Regret in the First Place

If, when Jerry was about 25 or 30, someone had given him a copy of Your Total Wealth: The Heart and Soul of Financial Literacy, and he had taken the authors' advice to heart, I would not have this story to write. But, of course, it only came out in early 2021. A theme runs through the book that applies to so many people obsessed with seeing their portfolios go up in value. Sussman tells us, "It is a simple truth; you can minimize financial regret and guilt by understanding the cost of obsessively focusing on monetary wealth."

I Wish I Had Done This Years Ago: All Too Common Financial Regrets Dubofsky adds, "If you are consumed by making money, and greed, you lose family, self-esteem, happiness. These things often become unintended consequences of acquiring financial wealth."

Suffering from FOMO

Sussman sees Jerry as the poster child for FOMO. "Liz describes her father as someone with an almost pathologic fear of missing out - that's FOMO," Sussman says. "When the stock market was going up, acting on the tips he got combined with his own FOMO issues, he made money. "Now, Jerry is at great risk for getting on the bandwagon of some stock that is hyped as helping investors recover their losses. He admits to suffering financial regret, which essentially is someone saying, 'I should have done something with my money that I did not, and therefore, I am missing out on something I should have had.' "He is in an extremely dangerous situation."

How a Financial Adviser Can Help

"Financial advisers help us deal with uncertainty, and the best advisers are skilled with finance and psychology, helping their clients achieve financial stability. That's what a good financial plan does," Dubofsky points out. "A growing group of advisers are in the 'protection business' and focus on clients who are vulnerable to being scammed. They build firewalls between a client's portfolio and their poor investment decisions. The objective is to make sure that the portfolio isn't going to be drained."

A Prescription to Sleep Better

The authors suggest these steps for families to take during scary financial times:If adult children are financially savvy, they need to be aware of what Mom and Dad are doing.Increase your due diligence. FOMO is very powerful and invites taking financial risks that will break your heart and your portfolio.Have a long-term perspective.Remember that this country has survived a lot of bad calamities in its 200-plus years of existence.Keep in mind that companies will always figure out how to make money.If you have a long-term horizon before you retire - 20 years or more - don't sell right now and even consider buying.Exercise caution if you have a five-year horizon. Buying now could be more problematic. Especially now, both of these books are relevant, practical and so helpful. Also, each is a great read! Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to [email protected]. (opens in new tab) And be sure to visit dennisbeaver.com (opens in new tab).

Check Your Financial Adviser Now (and Every Year) or Regret It Later This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC (opens in new tab) or with FINRA (opens in new tab). Explore More Building Wealth H. Dennis Beaver, Esq.Attorney at Law, Author of "You and the Law"After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, "You and the Law (opens in new tab)." Through his column he offers readers in need of down-to-earth advice his help free of charge. "I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift." Latest 4 Ways You Can Take Advantage of a Down Market With markets down for the year, it may seem that all the news is bad. But now could be a good time to make some profitable moves. By Adam Grealish • Published 11 November 22 New, Used or Leased: Is Now the Time to Buy an Electric Vehicle? The Inflation Reduction Act created new tax breaks for electric vehicles. Here's a guide to which EVs count and the best time to buy. By Rivan V. Stinson • Published 11 November 22 You might also like 4 Ways You Can Take Advantage of a Down Market With markets down for the year, it may seem that all the news is bad. But now could be a good time to make some profitable moves. By Adam Grealish • Published 11 November 22 Finding Peace of Mind With Your Retirement Income Even in tough times, you can secure retirement income that lets you maintain your lifestyle, lasts a lifetime, adjusts for life events and leaves a legacy for the kids. By Jerry Golden, Investment Adviser Representative • Published 10 November 22 What to Do When an Unhappy Customer Threatens to Ruin Your Rep Some customers go too far when they feel they haven't been treated well, demanding unreasonable make-goods and even resorting to extortion. An attorney offers some advice. By H. Dennis Beaver, Esq. • Published 10 November 22 Rising Interest Rates Change the Math on Pensions for Some Would-Be Retirees Now is a good time to think about when and if to take a lump sum on your pension and what to do with it. Let's explore the pros and cons. By Michael Aloi, CFP® • Published 9 November 22 Counterattack: Tips for Thwarting a Will Contest From contentious relatives to scam artists, wills are not immune to the threat of a contest. If you have an inkling such a fight could be in your estate's future, here are some ways to limit the risk. By Linda Kotis, Esq. • Last updated 10 November 22 5 Steps to a Stronger Financial Plan It's impossible to be right all the time, but a strong plan and constantly assessing where you are can help you pivot when bad things inevitably happen. By Eric Roberge, Certified Financial Planner (CFP) and Investment Adviser • Published 8 November 22 Safe Harbor 401(k)s Can Help Small-Business Owners Keep Happy Employees Immediate vesting and contributions by the employer regardless of the employee's participation pump up workers. Employers get lower costs and tax benefits. By Mike Piershale, ChFC • Published 8 November 22 5 Survival Tips for the Bear Market It's been a painful year for investors, but focusing on the long term and implementing constructive actions can help weather the turbulence. By Daniel Kern, CFA®, CFP® • Last updated 8 November 22 View More ▸ kiplinger About Us (opens in new tab) Terms and Conditions (opens in new tab) Privacy Policy (opens in new tab) Cookie Policy (opens in new tab) Kiplinger is part of Future plc, an international media group and leading digital publisher. Visit our corporate site.
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