The five biggest financial mistakes consumers make

When we were children, money was a fun thing. There were coins of different sizes and colors, bills with people’s faces on them, and special cards our parents used to buy things. We chose to have the bigger nickel instead of the dime. We thought $100 was a lot of money – enough to buy a house. When the ice cream truck came, we emptied out all of our savings to buy a popsicle.
With age came a greater understanding about money and how it works. However, we still make financial mistakes today that can have huge impacts on our future.
Here are the top five mistakes and what you can do to avoid them.
1: Not saving for retirement
The average American spends 20 years in retirement, and many people are living 30 years or more after they retire. You need to start saving now. And if you are saving, don’t borrow against it. Borrowing against retirement can actually postpone it for 5 to 10 years. You can get a loan for a house, car or continuing education but you can’t get a loan for retirement.
The secret to saving a large amount of money is to start small, start early and stay consistent. You want to leverage the principal of compounding interest, which means that the interest you earn on your money will earn money and accumulate faster than if you wait and invest large amounts. In addition, if the company you work for has a 401(K), use it, and if they match your contribution, do whatever you can to contribute enough to receive the full match. If they match half of what you contribute up to a certain percentage, that’s a 50% gain on your investment.
2: Not paying off credit card debt
Ideally, you should only carry one primary credit card. If you travel frequently a second card might make sense for travel emergencies. Always use your primary card for your purchases and pay it off in full every month.
More important, don’t live off of your credit cards by making only minimum payments. You end up owing a lot more money in the long run than if you were to pay off your balance in full. If you don’t have the cash in your account, you shouldn’t be putting that purchase on your credit card. Just because you can afford the payment does not mean you can afford the purchase.
Also, be careful when it comes to credit card offers. Many credit cards offer a lower initial rate that increases in a specified amount of time. Read your terms and statements carefully to avoid unexpected costs.
3: Not establishing a budget
Track every dollar you spend for one month. Write down all purchases, bill pays, donations, etc.-even the $1.49 pack of gum.
Take your record of spending and create a budget with this information. Make sure to include savings as part of your budget. As you and the economy do better, stick to your initial budget and put the extra money into savings or retirement.
4: Not monitoring account balances and transactions regularly
By monitoring your account balances regularly, you can keep track of your family budget, transactions and account balances. Knowing this information will allow you to avoid any unnecessary fees, such as overdraft. It will also ensure that unauthorized purchases get detected and addressed.
Today, most banks offer numerous ways to check your account information and balances. For example, KeyBank clients can check balances online, in person at a branch, at an ATM, by calling a toll-free number and with mobile banking.
5: Not having a relationship with a banker
Your banker should be your ally, a partner in helping you achieve your financial goals. By establishing a relationship with a banker, you will have access to tools and resources that can help you develop and execute a plan, whether it is as simple as a household budget or saving for a major purchase, college or retirement.
If you avoid the above mistakes and develop a sound plan that you execute with discipline and patience you can have money to play with and money to live on long into the future.
    Cheri Doak of Caribou is senior vice president and retail banking leader at Key Bank in Maine. She can be reached at (207) 764-9425 or cheri_doak@keybank.com.