If you’re beating yourself up about a recent financial misstep, you may want to cut yourself some slack. In fact, a new survey suggests you’re in good company, as more than half of consumers have made a costly money mistake in the past 12 months.
Financial services company KeyBank surveyed 1,200 consumers about their financial habits.
- Between the ages of 18 and 70
- Had a checking or savings account
- Had sole or shared responsibility for financial decisions in their households
While most respondents described themselves as financially savvy, the study proved that nobody is perfect.
A majority of consumers feel confident about their money knowledge, with 75% of respondents describing themselves as financially savvy and 41% considering themselves to be a personal finance expert. But that doesn’t mean every financial move they made was the right one.
Looking back, 54% said they made a financial faux pas — referring to a financial false step or mistake — in the past year. Most faux pas were in the area of budgeting, with 89% of consumers saying they made these errors in the past year. That was followed by:
- 73% who made saving errors
- 64% who made borrowing or debt-related errors
- 63% who made investing errors
- 52% who made insurance errors
When it comes to the actual errors, the most common one reported was impulse buying, which 25% admitted to doing in the past year. That was followed by:
- 21% who admitted to failing to stick to a budget
- 18% who said they didn’t save for an emergency
- 17% who said they spent beyond their means
- 15% who said they spent their tax return instead of saving it
- 15% who missed a credit card payment or carried a balance on their credit card
- 15% who did not invest any money
While all the errors could be harmful in some way, some could do more financial damage than others. Respondents ranked the errors and rated waiting too long to save for retirement as the most damaging, followed by mismanaging debt and spending money that was designated for emergency savings.
The good news is consumers aren’t burying their heads in the sand. More than half of respondents (59%) said they are dealing with their financial mistakes head-on. Most (89%) believe they will recover from their mistake in five years.
Also, 65% said they will take steps to prevent financial mistakes in 2020:
- The largest percentage (30%) said they will identify and prioritize their needs over their wants
- 22% said they will create and follow a monthly budget that they will review on a weekly basis
- 13% said they will increase their knowledge by taking financial literacy courses
While nobody enjoys making mistakes, missteps can be turned into valuable learning experiences. However, we can also learn from the mistakes of others by seeing what financial challenges are most common. If you have made errors in the past and want to learn more so you can better manage your finances in the future, you may want to check out personal finance podcasts to increase your knowledge base.