As someone who writes about finances for a living, I tend to hold myself to a certain standard when it comes to my money-related choices. But truth be told, I've made a number of money mistakes in my day -- like staying away from stocks for years because I was scared of the market, or waiting too long to open a 401(k). But if I had to choose my single biggest money regret of 2016, it would have to be something frustratingly simple: I didn't save enough.



The best laid plans...

I started off 2016 with an updated budget that incorporated room for savings. The problem? I ignored that budget for much of the year.

Not that it's any consolation, but I was in pretty good company in that regard. According to a recent Wells Fargo report, about 60% of Americans don't follow a budget. Still, not following a budget made it harder to track my spending, and as a result, I blew way too much cash on things I didn't need.

I also failed to account for one-time expenses that popped up at various points throughout the year. For example, I pay $1,200 a year in homeowners' insurance, only instead of setting aside $100 each month to cover it, I forgot about it and almost came up short when that payment was due. Had I been following my budget, I would've remembered that payment and spent less money along the way in preparation.

Misplaced priorities

But not following a budget is only one of the things I did wrong in 2016. I also forgot to follow my cardinal rule: Pay yourself first. Ideally, we should all aim to save at least 10% of each paycheck, regardless of how much we earn. Now, my income is variable and can change drastically from one month to the next, yet instead of putting 10% of my earnings into the bank every month, I did so only when it was convenient for me.

October, for example, was a slower month for me, so what I should have done was sit down with my budget, figure out how to account for the drop in income, redistribute my spending allowances, and put 10% of whatever I ended up earning aside for savings. What I actually did was ignore my budget, overspend that month, and save nothing.

But that wasn't my only blunder. July was a pretty strong month for me income-wise, but instead of seizing the opportunity to stick extra cash in my savings account, I rewarded myself with purchases that perhaps improved my quality of life on a short-term basis but ultimately made me feel bad about the way I spent my money.

Here's what it cost me

All in, I'd say I probably saved $5,000 less than I could have because I disregarded my budget and neglected to pay myself first. And while $5,000 is a large amount of money in its own right, in reality, my mistake cost me much more. See, had I put that cash into relatively conservative investments averaging an annual 4% return, I would have put myself in a position to be $16,000 richer 30 years from now -- and that's without adding a single dime above that initial $5,000 investment.

Furthermore, had I put that money in stocks -- which have historically delivered an average annual 9% return -- I could've turned it into $66,000 over 30 years without having to do a darn thing other than sit back and watch it compound. So in reality, I didn't just fail to save $5,000; I failed to make a serious contribution to my nest egg.

Of course, what's done is done, and there's not much use dwelling on what could've been. But if you're having similar regrets, we can all learn from -- and fix -- our mistakes by following these three simple rules:

  1. Create a budget and stick to it.
  2. Work one-time expenses into your budget so you're not caught off guard.
  3. Put 10% of your earnings into savings before spending a dime. If you don't trust yourself to do this, then arrange for it to happen automatically.

The upside to making mistakes is that they are the best teachers. So here's to a more financially responsible 2017. May it be a prosperous one for all of us.

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