Published in: Banks | Nov. 16, 2019
97% of Americans Are Making This Money Management Mistake
By: Christy Bieber
Almost 100% of Americans are making a big money management error. Find out what it is here.
There's a lot that goes into successful money management -- and far too many Americans are falling short in important ways. One of those ways is the time they spend on personal finance issues.
The vast majority of Americans are making a major mistake in not devoting nearly enough time to handling financial matters. In fact, according to recent research from The Ascent, just 3% of Americans spend any time at all managing household financial matters on a daily basis. That means a whopping 97% do absolutely nothing at all to manage their money each day.
Giving no time or attention to money issues is definitely not advisable. But why is it a problem and what can you do to solve it? Read on to find out.
Spending too little time managing money can be a big problem
The Ascent's research not only revealed that the vast majority of Americans perform no money-management-related tasks on a daily basis, but also that the average amount of time Americans spend on financial issues is only around an hour and 12 minutes per month. This is despite the fact that close to half of survey respondents said that being financially prepared for the future is important to them.
If you spend no time managing your money, you won't be able to handle even the essentials -- such as making sure you're sticking to your budget, ensuring that your credit card balance isn't too high, and confirming that you are on track to accomplish important financial goals.
This lack of time and attention given to finances might help to explain why The Ascent found that the majority of Americans don't have the recommended amount of emergency savings and close to half of respondents don't know how much they should save for tomorrow versus the amount they should spend today.
Which money management tasks should you perform daily?
If you're spending too little time handling your finances and want that to change, there are many things you can and should do.
You should start by making sure you have a detailed budget that allocates your spending and your savings. You should also set some financial goals, including saving up enough money to cover at least three months of living expenses in case something happens to your income. If you're in debt, you should also create a debt payoff plan.
Accomplishing these initial tasks is going to take some time, but once you've checked these items off your to-do list, your daily financial management tasks will be easier. In fact, you'll probably only need to devote an average of around 10 minutes a day to your finances, tops. If you do, you'll be spending far more time on money management than the 97% of Americans who don't perform any financial management tasks on a daily basis -- and you'll be in much better shape as a result.
Some of the daily tasks you should aim to accomplish include:
- Reviewing how much you’ve spent today: You can manually record what you spent money on using a spreadsheet or use an app that links to your credit cards and bank accounts. If you use an app, you'll want to make sure each transaction is correctly categorized.
- Comparing your spending to your budget: If you track spending, you can see if you're sticking to limits you set for yourself in your budget. This is important for making sure you're actually devoting the right amount of money to different spending categories.
- Checking your financial accounts: You can check your online bank and credit card accounts to make sure you recognize all the transactions that have posted and to ensure that your credit card balance isn't too high (or that your bank account balance isn't too low). You can also periodically check your investment accounts to make sure you're hitting savings goals and allocating assets appropriately.
These tasks are important and if you aren't devoting at least a little bit of time every day to taking care of them, there's a good chance that your finances will suffer.
Don't be among the majority of Americans that spend no time on money management
Although The Ascent's research showed that it’s normal to spend none of your time managing your money, it's definitely not a good thing to neglect your finances.
Instead, make a daily money-management to-do list and be sure you're devoting the time that’s necessary for you to stay on track with your financial goals, save for the future, and limit your spending to reasonable levels. Devoting this time to your household financial issues will be worth it when your financial life is in much better shape than the average American's.
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