Common Money Mistakes and 4 Ways to Overcome Them in 2020
When you reflect on your financial journey over the past year, are there any missteps that come to mind? If so, you're not alone — 54 percent of people say that they've made a financial misstep, according to a new KeyBank survey of 1,200 consumers.1 But the mistakes you've made in the past don't have to dictate your future.
Read on to learn about the most common money errors people make and find simple ways to put your financial faux pas behind you.
Most Common Financial Faux Pas
Some of the most common financial missteps are the ones that are the easiest to make and the easiest to repeat — missed credit card payments, overspending, and overdrawing an account are all top of the list. Most financial mistakes typically fall in one of three categories: budgeting, investing, and borrowing/managing debt.
- Budgeting: Managing monthly expenses is the most common type of money misstep.
- 47 percent report impulse buying
- 33 percent report not saving for an emergency
- 25 percent admit to spending their tax return instead of saving it
- Investing: With fast-moving markets and so many questions surrounding retirement, some forget to include investments in their financial picture.
- 27 percent say they don't invest
- 22 percent report not contributing to a retirement account
- 19 percent say they don't pay attention to the markets
- Borrowing and Managing Debt: Sometimes it's easier to borrow money than it is to keep up with your credit card payments:
- 28 percent have missed a credit card payment or carry a balance on their card
- 19 percent don't know their credit score or don't check it as often as they should
- 17 percent have opened or closed a credit card they didn't need
4 Steps to Overcoming Money Missteps
Do any of the financial errors above sound familiar? If so, remember that you can take immediate steps to prevent financial faux pas in the future.
- Identify any potential overspending by categorizing your needs and your wants in the form of a budget. Use a budget calculator to put one in place and check in on your progress on a regular basis. Make sure to budget savings for your emergency fund and retirement accounts.
- Next, say "bye-bye" to missed payments by setting up calendar reminders or automatic payments. If you choose to go with calendar alerts, set them to be no later than five days before a payment is due. This ensures that the payment has time to make the journey from the bank to your account.
- Check in on your credit report at least twice per year. If you're paying down debt, check your credit score quarterly. And if you have debt, create a plan to pay it off. Start by using a debt payoff calculator or a snowball debt elimination calculator. You can also save up to pay down debt with the help of KeyBank's Easyup® program, which automatically transfers $1 from your checking and into your savings account with each purchase that you make.
- Finally, set a plan to stay informed about the financial world using podcasts and various online resources. When you need help, don't be afraid to ask for — family members are a great place to start. You can also reach out to your financial wellness advisor. A little extra guidance can help you make better, more informed financial decisions going forward.