Overcoming Financial Regrets
She kept the plane straight and level while I thumbed through the A&D trying to find a phone number for the tower. This was weird. After repeated radio calls I wasn’t getting anything. Did we arrive before the tower was open? Our radios worked when we departed our home airport 30 mins earlier. I triple checked the frequency. I called tower, I called ground, I called unicom, no response, I switched back to tower. This was strange.
It was a nice VFR morning on a Memorial Day weekend. I watched departing traffic take off from RWY 27. I didn’t hear their radio calls either. I looked around the area, there was no other traffic in sight. “I have the flight controls” I said as my passenger handed the controls back to me. I decided to land. I set up for a left base and began my calls as if I were at a non-towered airport. I was uncomfortable because something was off. I over communicated my position, I also let anyone listening if they could hear me, I could not hear them. As I turned final, I saw a flash of light as if the sun was reflecting off the tinted glass from the tower. I was focused on putting the plane down. I landed, and we taxied to the ramp.
As I’m going through the shut-down check list, I see a truck making its way toward our position. My heart sank. Oh no. It turns out the tower could hear my radio calls, but I couldn’t hear them. It also turns out the flash of light I saw was the tower clearing me to land, thank goodness! We fiddled with the radios and realized that we had turned the volume down so much we couldn’t hear any incoming transmissions. During flight my passenger’s headset was giving her some trouble, so I mistakenly turned down the master volume way too low.
How could I have made that error? How could I have forgotten the loss coms procedure? The potential for things to have gone horribly wrong was not loss on me. You can bet that I won’t be making that mistake again! We went to brunch and then we got into the plane and flew back. I was grateful for how things ended and I learned from it and moved on.
I encourage clients to do the same thing when it comes to past financial decisions, they’ve made that they’re not happy about. Learn from them and move on.
Don’t Let Past Financial Decisions Dictate Your Future
The beginning of a new year finds many pilots establishing new financial goals or recommitting to prior goals that may have fallen short, such as increasing emergency or retirement savings, or paying down debt. Whatever you resolve to accomplish this year, it’s important that you don’t allow past behaviors or decisions that have held you back to dictate your future. That’s a formula for remaining in place, not moving ahead.
Overcoming financial regrets
Let's look at five common financial regrets and steps you can take to avoid them and strengthen your finances.
1. Failing to set money aside for emergency savings
Putting money away for a rainy day is critical for creating a sense of financial well-being. Having cash set aside for an unplanned or emergency expense can go a long way toward reducing feelings of financial stress and anxiety and may prevent you from taking on unnecessary debt. To build emergency savings, consider setting aside the same amount each month in a bank savings account or money market fund.
Watch for new ways to save in the future. In 2024, under The SECURE 2.0 Act of 2022 (SECURE 2.0)1, if your employer offers a retirement account and you are a non-highly compensated employee, they can allow you to contribute to a Roth for emergency savings. The maximum savings amount per year will be $2,500, and you will be able to make up to four withdrawals annually. (Your employer may or may not offer a match on these emergency savings.)1
2. Waiting to begin saving for retirement
According to a recent survey, 55% of Americans say their retirement savings are not where they need to be, with nearly 35% saying they’re “significantly behind” and another 20% saying they’re “somewhat behind” their goals.2 The good news is that it’s never too late to begin saving—or to save more—for retirement. If you’re eligible to participate in your employer’s retirement plan, that can be one of the better ways to grow savings over time thanks to the combination of tax-deferred compounding and matching or direct contributions. Even if you can’t contribute the maximum contribution amount, which is $22,500 in 2023, make sure you’re contributing enough each year to capture the full match (usually seen in business aviation, regionals & part 135 operators) so you’re not leaving free money on the table.
If your major airline provides a strong direct contribution to your retirement plan, make sure you’re contributing enough to keep your financial plan on target.
If you’re age 50 or over, take advantage of the ability to make catch-up contributions of up to $7,500 in 2023, for a total of $30,000 for the year. Beginning in 2025, catch-up contribution amounts are scheduled to increase even more to help those nearing retirement close the savings gap. SECURE 2.0 increases these limits to the greater of $10,000 or 50% more than the regular catch-up amount for individuals ages 60 through 63. The increased amounts will be indexed for inflation after 2025.
If you’re a self-employed pilot and don’t have access to an employer plan, consider contributing to a Roth IRA or to a plan for self-employed business owners, such as a SEP or an individual 401(k).
3. Not following a budget
A budget is a highly effective tool for pursuing your financial goals since it provides a clear picture of your cash flow—what’s coming into your household and what’s going out. It helps to optimize savings and spending to help you remain on track toward your goals. Our clients enjoy a budgeting app that’s integrated with the financial planning software. Other options to consider include apps available through your financial institution or other service providers. Many are free and allow you to aggregate data from accounts at different providers so you can view account values in real time. Once you establish your budget, review it at least monthly and watch for any changes in spending that need to be addressed.
4. Racking up credit card debt
When used judiciously, credit cards can be a useful tool for building your credit history and maintaining a strong credit score. However, it’s all too easy for this type of debt to spiral out of control if not managed carefully. To keep debt in check, pay off balances in full each month. If that’s not possible, make sure you’re paying more than the minimum payment due each month to pay off revolving balances faster. You can also prioritize paying off the highest interest debt first, to minimize the amount of interest you pay overtime. Use your budget to find ways to cut spending to free up more money to pay down debt.
5. Not having a long-term strategy
Without a comprehensive strategy in place, it can be difficult to know if you’re on track working toward your goals. A strategy can help to align financial decision-making with your personal goals, timeframe for pursuing them, and risk tolerance. It can provide a framework for managing risk and making decisions that support your goals at each stage of your life.