According to a recent Harris Poll, 75% of Americans admit that they have made at least one financial mistake in their lifetimes. More than a third say that they made their biggest financial mistakes because they didn’t have the financial knowledge that they needed in order to make the right choices. Another 22% admitted that being young and irresponsible lead to their early personal finance mistakes. But exactly what the biggest financial mistakes are varies from generation to generation.
The Biggest Financial Mistakes Are 401(k) Mistakes
Generally speaking, some of the biggest financial mistakes that people admitted to were mistakes related to their 401(k) plans. More than half of those surveyed said that not investing in a 401(k) was a major mistake. Moreover, this was ranked number one of all major mistakes on the list. Similarly, 42% said that not starting an IRA was a major mistake.
47% said that not contributing enough to the 401(k) to get a company match was a major mistake. And 37% said that it was a major mistake to borrow from your 401(k) before retirement.
401(k) Mistakes Aren’t As Big for Millennials
When the answers were broken down by generation, the responses changed a little bit. Millennials just aren’t as concerned as the other generations about 401(k) mistakes. This could be because they’ve prepared well and aren’t making those mistakes.
Alternatively, it could be because they haven’t neared retirement age, yet, so they aren’t dealing with the repercussions of such mistakes. After all 65% of Baby Boomers (who are at or near retirement) listed this as a major mistake. 56% of Gen Xers agreed. Only 33% of Millennials said that this was among the biggest financial mistakes.
Interestingly more of them (35%) said that it was a major mistake not to invest enough in a 401(k) to get a company match. But only 26% considered it a major mistake to borrow from it before retirement. That’s compared to 40% of Gen Xers and 44% of Baby Boomers.
Millennials Biggest Financial Mistakes
Millennials ranked three things higher on the list of biggest financial mistakes than anything related to 401(k) problems:
- Not having an emergency fund
- Having a low credit score
- Keeping financial secrets from your partner
Interestingly, though, they didn’t consider these things as much of a mistake as the other generations did. You see, for each item, they had the option to respond that it was a major mistake, a minor mistake, embarrassing but not a mistake, or not a mistake at all.
Millennials ranked not having an emergency fund as their biggest financial mistake. However, only 41% said it was a major mistake. 31% said it was a minor mistake. In contrast, Gen Xers rated it number 2, behind not investing in a 401(k), but still 53% of them felt that it was a major mistake. Similarly, it was number four on the list for Baby Boomers, but 53% said it was a major mistake.
Things That Aren’t Financial Mistakes
Of all of the things on the list, supporting your aging parents financially wasn’t considered among the biggest financial mistakes. In fact, 60% said it wasn’t a mistake at all. Only 11% said that it was a major mistake. There was some generation difference: 71% of baby boomers, 58% of Gen Xers, and 44% of millennials agreed that it wasn’t a mistake. The younger generations may just not have had to do this, yet, of course.
All three generations also agreed that accepting money from others for living expenses wasn’t one of the biggest financial mistakes, although it might be embarrassing. Millennials were less likely to consider it embarrassing than the other generations. Still, it was the thing on the list that they were most embarrassed about. Second on the list was overspending on an expensive item.
About one quarter of millennials said that it was not among the biggest financial mistakes to fail to invest in the stock market sooner. 21% of Gen Xers and 24% of Baby Boomers agreed. Whereas millennials had ranked keeping secrets from their partner among their biggest financial mistakes, 29% of Baby Boomers said that this wasn’t a mistake at all.
What have been your biggest financial mistakes?
- Millennial Money Compared to Gen Z
- Millennials vs. Baby Boomers When It Comes to Money
- Millennials Shouldn’t Rely on “The Great Wealth Transfer” of Inheritance