"The feeling of regret, while not pleasant, may serve as a teaching moment to help us understand what we enjoy and what we don't enjoy," he has explained. Paying attention to regret can teach you what you truly value and don't value in life. And in finances.
That's why Common Cents, a financial behavioral research lab affiliated with Duke, recently set out to discover what types of spending Millennials regretted the most. By partnering with financial app Qapital, the research team was able to survey 1,000 young people aged 20-36 about what purchases were most satisfying and most regretted. Here are the three types of spending Millennials felt the worst about down the line:
1. Fees and penalties
It's no shock that Millennials were most annoyed by bank fees -- no one likes forking over useless money to their bank, and it's especially frustrating when you have no one to blame but yourself, as in the case of late fees.
How to avoid this regret: Common Cents' recommendation on how to avoid this regret is dead simple and probably good advice for everyone no matter your age -- put as many bills as possible on AutoPay. Not only is that less hassle, but it's also going to free you from irritating penalties should you miss a deadline.
Plus, Common Cents found Millennials regret recurring expenses an average of 10 percent less than those they actually had to pull out their wallet to pay for.
2. Impulse purchases
Millennials may take a lot of flak for being careless when it comes to small, luxury impulse buys (like, say, $19 avocado toast or $4 lattes), but apparently they beat themselves up for these purchases nearly as much as smug financial gurus.
"The data clearly shows a greater level of fulfillment (roughly 70 percent) for purchases critical to living such as rent, healthcare and groceries over impulse purchases (near 50 percent)," reports Common Cents. Also, beware the weekend: "those purchases made on Wednesdays were nearly five percentage points more satisfying than those made on Saturday," the report adds.
How to avoid this regret: Just limit them. Make yourself a budget with a reasonable amount of wiggle room for enjoying life given your financial situation, and stick to it.
3. Eating out
Aside from bank fees (the absolutely most regretted expenditure for Millennials), the bottom of Common Cents' list of satisfying ways to spend your money sounds a lot like leafing through the pages of your local Zagat Guide. Fast food, restaurants, coffee shops, and bar purchases all appear near the very bottom of the ranking.
How to avoid this regret: Maybe skip that avocado toast after all. The moguls who suggest you will be able to magically afford a house if you just turn down every brunch invite are probably wrong (in most cities, at least, their math really doesn't add up), but other experts have found that Millennials are still guilty of overindulgence when it comes to eating out.
"Millennials spend more than an average of $2,300 more per year than older generations on five key items: groceries, gas, restaurants, coffee and cell phone bills, a recent study released by personal-finance site Bankrate found," notes MarketWatch's Quentin Fottrell. Common Cent's data suggests that, in their hearts, most Millennials must know this too. Grabbing a convenience burger isn't just going to give you indigestion, you're likely to suffer spending regret too.
Interestingly however, you probably should feel free to splurge on other forms of entertainment and going out, like art, music, travel, and movies. These activities came in near the top of the satisfying ways to spend money list, which tracks with other research showing buying experiences makes us way happier than buying things.