According to a new Financial Wellness Survey from KeyBank, 75% of consumers consider themselves financially savvy, with 41% stating they're savvier than most or they consider themselves experts in areas of personal finance.
However, over half (54%) admit they have made a financial "faux pas"—referring to a money "false step" or error. Impulse buying tops the list as the most common "faux pas" for all consumers (25%).
The findings revealed financial "faux pas" related to budgeting are the most common type of money misstep, followed by savings, debt management, investing, and insuring.
For example, nearly half (47%) of consumers who committed a budgetary "faux pas" reported they had fallen victim to sudden spending whims more often than other types of budgeting "faux pas," such as spending beyond their means or paying for subscription services that go unused.
Additionally, among those who made savings missteps:
- 1 in 3 didn't save for an emergency.
- More than 1 in 4 admit to spending their tax return money.
- More than 1 in 5 admit to not contributing to retirement savings.
Interestingly, despite feeling more confident in their financial know-how, younger generations more often have budgeting issues than older generations.
For example, 1 in 5 Millennials consider themselves a financial expert, compared to fewer than 1 in 10 Baby Boomers. Additionally, 1 in 3 Millennials who committed budgeting "faux pas" reported feeling afraid to check their bank account, compared to 1 in 5 Gen-Xers and just 1 in 10 Baby Boomers.
The good news is a large majority of respondents who committed a financial "faux pas" (89%) feel they can recover within five years. In fact, most people (59%) prefer to face their financial "faux pas" head on.
Those who have made a financial misstep will either turn to their spouse/significant other or a family member for support (48%), investigate online resources (26%) or seek counsel from a banker/financial advisor (22%). However, 22% don't talk to anyone because they're either too embarrassed or aren't sure who to talk to.
A good time to help your clients correct their financial missteps is during Financial Literacy Month, which is currently under way. Visit NAIFA’s consumer-facing site at www.FinancialSecurity.org or go to www.lifehappens.org for the tips and resources you need to get started.