Despite our best efforts to be financially responsible, it's easy to fall victim to blunders and setbacks along the way, according to KeyBank in its new financial wellness survey. While 75% of Americans do consider themselves financially savvy, 54% admit that they've made a glaring money mistake along the way. Here's what some of those errors looked like -- and how to avoid them yourself.
47% have made an impulse purchase
Walk into just about any store these days, and you're apt to be distracted by sale signs advertising fabulous deals you just can't pass up. Impulse buying is a good way to waste money, yet nearly half of Americans have done it.
The best way to avoid this trap? Make shopping lists before hitting the stores, leave your credit cards at home, and bring only enough cash to cover the items you know you need to buy. Will you miss out on some reward points by not using a credit card? Sure. But you'll also avoid racking up a costly balance in return.
38% didn't stick to a budget
Without a budget, you'll likely have a hard time tracking your spending and meeting your savings goals. Yet more than one-third of Americans acknowledge that they haven't always stuck to a budget.
If you want to stay on course with yours, make sure your budget is both accurate and realistic. Comb through your bank and credit card statement from the past year or so to get a sense of what your various expenses actually cost you. Then, allocate a reasonable amount of money to nonessential spending, because, let's face it, small luxuries are a part of life. If you give yourself no leeway at all to spend on restaurants and entertainment, you're likely to give up on your budget. But if you give yourself a modest allowance, you might actually manage to follow it.
33% didn't save for an emergency
We all need money in the bank for unplanned bills, whether it's a car repair, a maintenance issue with your home, or a medical problem that lands you in the hospital with a very expensive ER bill. Emergency savings are also important in the event that you lose your job and are forced to go without an income for a period of time.
It's troubling to see that one-third of Americans haven't set money aside for emergencies, so you should aim to do better. Specifically, cut back on spending or boost your earnings with a side job until you have enough money in savings to cover at least three months of essential living expenses. That way, you won't be forced to resort to debt when surprise bills pop up.
22% have not contributed to retirement savings
It's hard to fund a retirement savings plan when you're faced with pressing expenses that can't wait. But if you don't make an effort to build a nest egg, you're likely to wind up cash-strapped when you're older. Rather than let that happen, rework your budget so there's room in there for retirement savings.
The good news? You don't have to sock away a fortune each month to amass a decent sum. Setting aside just $150 a month, for example, over 40 years will leave you with close to $360,000 for your senior years. Now that figure does assume that you invest your savings at an average annual 7% return during those 40 years. But if you invest heavily in stocks, that's a more than reasonable assumption given the market's historic performance.
Money-related blunders can happen to the best of us, but they can also have serious consequences. Knowing how to avoid these mistakes can help you stay on course financially and steer clear of regrets.