KeyBank: 54% of Americans Commit Financial Faux Pas
CLEVELAND, Ohio – Despite consumers considering themselves to be financially savvy, more than 54% of Americans admit they have made a financial faux pas, according to the new Financial Wellness Survey from KeyBank.
Impulse buying tops the list as the most common faux pas among all consumers, with 25% saying they’ve made such purchases. Also at the top of the list were not sticking to a budget (21%), not saving for an emergency (18%) and spending beyond your means (17%).
Small steps people can take, like checking their account balance, will propel them forward to create a healthy financial future, said Chenna Cotla, behavioral economist in KeyBank’s financial wellness strategy group, in a statement.
Sixty-five percent say they are most likely to take these three steps to prevent money mistakes in 2020:
- Identify and prioritize needs and wants.
- Determine a monthly budget and revisit on a weekly basis.
- Educate themselves through financial literacy courses.
In addition, findings revealed financial faux pas related to budgeting are the most common types of money missteps, followed by savings, debt management, investing and insuring. Nearly 47% of consumers who committed a budgetary faux pas reported they had fallen victim to sudden spending whims.
Not all faux pas are created equal, Cotla continued. Some false steps with finances may be common, but that doesn’t mean they aren’t serious. One and three consider not saving enough, waiting too long to save for retirement to be the most severe of financial faux pas, she said.
“If not addressed promptly, such missteps can be a slippery slope,” Cotla said.
Overall, 75% of Americans consider themselves financially savvy and 41% feel they’re savvier than the average person.
Younger generations more often have budgeting issues compared to older generations, despite feeling confident in their financial know-how, KeyBank reports. One in five millennials consider themselves a financial expert, compared to fewer than one in 10 baby boomers.
The good news, Cotla continued, is that 89% of respondents who committed a financial faux pas feel they can recover within five years. Those who have made a financial misstep will either turn to their spouse, significant other or a family member for support. They will also investigate online resources or seek counseling.
However, 22% don’t talk to anyone because they’re either too embarrassed or aren’t sure who to talk to.
“Don’t overlook the resources at your disposal, especially when you have the option to build a financial team with your banking partner,” said Patrick Smith, KeyBank’s head of financial wellness and retail strategy.
KeyBank partnered with Schmidt Market Research to survey 1,200 consumers nationwide on topics related to financial faux pas. Respondents were 18 to 70 years old with a checking or savings account who have sole or shared responsibility for household financial decisions. Responses were collected from Oct. 14 to 21 in 2019.
Results from the survey can be viewed here.
Published by The Business Journal, Youngstown, Ohio.