Have You Made a Big Money Blunder? You're Not Alone

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Bills money problemsA new report by the Consumer Federation of America and Primerica (PRI) found that two out of three middle-class Americans say they've made at least one "really bad financial decision." And more than half of those acknowledge making more than one.

While the median cost of those mistakes was $5,000, thanks to a few outliers -- 2% of those surveyed lost $200,000 or more -- the average was much higher, at $23,000.

The report also shed light on the investing habits of middle-class Americans, described as those with household incomes between $30,000 and $100,000. If given $1 million to invest for retirement, the survey asked, what would you do? Only 21% of middle-class Americans would invest that money in stocks, bonds, and/or mutual funds, compared with 48% of those earning $100,000 or more. And 19% of middle-class responders said they would "invest" the money in a savings account. Considering that the average money market account pays just 0.49% in interest, there are much better investing options out there.

Given the ubiquity of these financial mistakes and questionable investing habits, this next result comes as a bit of a surprise: A whopping 80% of the survey's respondents rated themselves as "good" or "excellent" at family budgeting and handling credit card debt. Around two-thirds of Americans rated themselves just as highly on retirement saving and managing mortgages as well.

What was your biggest financial blunder? Feel like sharing? Tweet your thoughts to @Daily_Finance!


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Matt

Why wouldn't we expect people to make financial blunders? Instead of teaching our kids what a loan is, we make them read Macbeth. Instead of learning how to allocate income, we teach them how to bake cakes. Instead of incentivizing useful skills, we subsidize their philosophy and music degrees (I love music and think great things come from philosophy, but these degrees aren't worth $200,000 in the job marketplace).

Want to park your savings somewhere and not have to worry about it? Sure! The FDIC will make sure you never lose money, because we, the government, think you're too stupid to do your own research. Heck,we don't care if the bank loses your money, and neither should you, cuz tax payers will be on the hook anyway, and not us!...What's a moral hazard?

September 20 2012 at 4:27 PM Report abuse rate up rate down Reply
evd10

I'll bet a lot of people who participated in this survey are looking back on a financial decision from the past and declaring it a mistake. Hindsight is always 20/20. It works both ways. Sometimes what seemed like a bad decision in the past turns out well in the future.

If one equates safety only with preservation of principal they are fooling themselves. If one loses money on their "investments" year-after-year to taxes and inflation they are sure to fail.

September 20 2012 at 10:18 AM Report abuse -1 rate up rate down Reply
cpo1514

Big money blunder??? Sure.. the folks that voted for the tax increase and called it Obama Care... Thank you Obama House & Senate Libs... By the way.... plan on participating i this venture and opting out of your 'Cadillac plan"? Thought not you axx holes

September 20 2012 at 7:12 AM Report abuse +1 rate up rate down Reply