Peter Griffith

You might have the know-how to strengthen your finances, yet odds are you’re still making bad decisions with your money.

Three out of 4 people consider themselves to be financially savvy,  although more than half have admitted to making poor money choices in the past year, according to a survey from KeyBank.

The bank polled 1,200 adults with a checking or savings account in October 2019.

Budgeting missteps were the No. 1 flub for participants, with 9 out of 10 admitting to making a mistake, the survey found.

“It’s one thing to know you’re financially savvy, but another to implement it on a day-to-day and month-to-month basis,” said Chenna Cotla, behavioral economist in KeyBank’s financial wellness strategy group.

Indeed, a quarter of participants admitted to making impulse purchases in the last 12 months, while a third failed to save for an emergency.

Even tax refunds were blown away: More than 1 in 4 participants spent the cash they got back from Uncle Sam, the survey found.

“Knowing you’re financially savvy isn’t enough to get everything right,” said Cotla.

Budgeting fundamentals

Whether your goal is to squash credit card debt or to invest for your retirement, you’ll have a hard time getting anywhere if you can’t master your cash flow.

That’s because you need to know what you’re doing with each dollar you earn before you can earmark any of it for saving, spending and investing.

“Budgets are built around cash flow, not the other way around,” said Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth in New York.

Take a close look at your bank statements. Understanding your cash flow means you know each cent that’s coming into your bank account every month and how you’re spending it, said Boneparth.

Reconcile your budget with your spending patterns to see how much money you can earmark for your goals — and be honest about where you can cut spending.

More from Personal Finance:
The IRS delayed refunds for 275,000 people last year
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“You’re supposed to live your life and not game the system, so people cut back in reaction to creating these budgets,” said Boneparth. “Apropos of that, they create unrealistic budgets or get too aggressive.”

Build your emergency fund. Four out of 10 survey participants said they could come up with $2,000 in the next month for an emergency, KeyBank found. Get to work on building an emergency fund to cover three to six months of expenses.

Determine how much you can save each paycheck by reviewing your cash flow.

Review and revisit your plan. Budgets aren’t static. Analyze your budget and spending, and see how much progress you’re making toward your goals.

“It takes years for your spending behavior to become intuitive and to view it ahead of the tape,” said Boneparth.

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