DC_Studio/Envato
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
What would you do if $1,000 just fell out of your pocket? Believe it or not, this is happening to Americans every year.
According to the latest National Financial Educators Council survey (1), adult Americans lost an average of $948 to mistakes made because of a lack of financial knowledge in 2025. And about 4% of those Americans — more than 10 million in total — could have lost above $10,000.
Those are gaudy numbers. But they bring with them both good and bad news.
The good news is that this is the lowest reported average loss in the past seven years of the survey.
For example, 2022 was by far the worst year recorded, with the average amount lost reaching about $1,800 during a time of painful inflation. Close behind that was 2020, when the average loss clocked in at $1,634 amid lockdowns, job losses and pandemic panic.
The bad news is that no matter how you slice it, a grand is still a big chunk of change to fumble away.
If you do the math, across a nation of approximately 260 million adults, the losses from the year 2025 alone add up to $246 billion — more than the total GDP of most countries, including the likes of Puerto Rico, Ukraine and Venezuela (2).
The bulk of these losses comes down to three common money mistakes, each of which is costing Americans billions collectively every year.
Here are those three mistakes — and how you can avoid them.
Racking up credit card interest and fees is by far the most expensive financial mistake most Americans make.
In 2024, interest charges on credit cards added up to an eye-watering $160 billion nationwide, according to the Consumer Financial Protection Bureau (CFPB) (3).
And credit card balances only seem to be growing. The Federal Reserve reports that credit card balances nationwide reached $1.23 trillion during the third quarter of 2025, an increase of $24 billion on the previous quarter (4).
Alongside growing credit card balances, average interest rates on credit cards issued by commercial banks also reached nearly 21% as of November 2025 (5), while new card offers were averaging just under 24% in January 2026 (6).
At those levels, carrying a balance for just a few months can balloon the effective cost of purchases — especially for borrowers with lower credit scores, who tend to face the highest rates.
Paying on time each month, avoiding carrying a balance and prioritizing paydowns of the highest-interest debt can help prevent interest charges from compounding further.
A balance transfer might also be a way to get some breathing space on any debt carrying over month to month. For example, transferring your balance to a card offering an introductory 0% rate could buy some time to pay down your balance.
Read More: Approaching retirement with no savings? Don’t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)
However, if you have a large amount of debt or have a fist full of credit cards with balances on all of them, you might want to consider developing a dedicated strategy.
The two most common methods are the avalanche and snowball techniques.
The avalanche method focuses on paying down your highest-interest debts first. This can create a cascading effect where, after the big debt is paid, you knock off the smaller ones quickly.
Meanwhile, the snowball method starts with paying down your smaller debts one after another to build up steam. Then, once you’re down to one debt, you put all your resources into paying it off. From here, most financial experts recommend building out an emergency fund, then getting to investing as soon as possible. But becoming debt-free is the first, and arguably most important, step.
With that said, tackling what you owe — not to mention life after debt — can be a challenge, especially if you’re playing catch up when it comes to financial literacy.
That’s where working with an advisor can come in.
You can find an experienced financial advisor near you for free through Advisor.com. Their network comprises fiduciaries — who are legally obligated to act in your best interests — so you can trust the advice you’re getting is unbiased.
Here’s how to get started: Just enter some basic information about your financial situation and goals, then Advisor.com’s AI-powered advisor matching technology will match you with the best fit.
But choosing an advisor still comes down to personal connection. That’s why Advisor.com lets you set up a free initial consultation with no obligation to hire to see whether they’re the right fit for you.
We know Americans are far too quick to whip out their credit cards, but what are they spending all that money on?
Well, in part, it’s things they definitely don’t need.
The U.S. luxury goods market was worth $115.22 billion in 2024 (7), while Americans were responsible for approximately 21% of global luxury revenue (8).
And it’s not just super-rich Americans making these purchases. According to a 2024 LoopMe survey, 70% of U.S. consumers report purchasing luxury goods or apparel every year. A third of those consumers report spending at least $1,000 on premium goods annually (9).
Looking forward, Americans have no intention of slowing down. Almost one in three (31%) luxury shoppers polled by YouGov in 2024 said they planned to spend more on high-end purchases in the year to come than in the past year (10). In a different survey, almost three-quarters (72.6%) of luxury shoppers planned to maintain or increase their luxury spending in the coming year (11).
While splurging occasionally in the context of a broader budget can be a good way to treat yourself, purchasing premium goods with credit is a recipe for snowballing debt.
Experts recommend treating this kind of high-ticket spending differently from spending on necessities: Pay for optional purchases with “fun money” set aside for the purpose and within clear limits (12).
One of the best ways to set aside fun money is with a budgeting tool.
After all, it’s hard to know how much latitude you have unless you know the ins and outs of your monthly ledger. But finding the time to manage a spreadsheet yourself, or combing through your bank statements, is busy work that not everyone has the time to do.
A quick daily check-in of your accounts can show you exactly where your money is going.
An app like Rocket Money can easily flag recurring subscriptions, upcoming bills and unusual charges by pulling in transactions from all your linked accounts.
This can help you cut unnecessary costs, and then you can manually redirect savings straight into your retirement fund. No spreadsheets, no guesswork, no stress. Small habits like this can make a big difference over time.
Rocket Money’s intuitive app offers a variety of free and premium tools. Free features include subscription tracking, bill reminders and budgeting basics, while premium features — like automated savings, net worth tracking, customizable dashboards, and more — make it easier to stay on top of your retirement contributions and overall financial goals.
Speaking of saving habits, if you have a budget but can’t seem to find room in it for extra savings, try making your spare change go further with Acorns.
Acorns is an automated investing and saving platform that simplifies the process of setting aside extra funds — and builds good saving habits at the same time.
The app works like this: You just sign up and link your bank account, and Acorns will automatically round up the price of each of your purchases to the nearest dollar. That difference then goes into a smart investment portfolio, letting you grow your wealth without even thinking about it.
Just $2.50 in daily round-ups is almost an extra $1,000 saved per year — a much better alternative than the $1,000 loss that many Americans experience due to financial errors.
Plus, if you want to supercharge your savings, you can get a $20 bonus investment when you sign up for Acorns with a recurring monthly deposit.
Finally, overdraft protection can be a lot more expensive than most Americans realize.
According to the CFPB (13), the median fee among retail banks for overdrawing a debit card is $34, which actually exceeds the median value of transactions made on these cards. In other words, the fees exceed the purchase costs.
Adding all these fees together, the CFPB estimated that consumers spent $15 billion on overdraft and non-sufficient funds (NSF) fees in a single year (14).
So, how can you dodge these unnecessary expenses?
The simplest way to avoid overdraft fees could be to regularly monitor your account balance and keep a buffer to cover upcoming transactions. Seeking a fee waiver will also sometimes meet with success, particularly as a courtesy on the first overdraft charge.
Other ways to reduce the risk of getting an overdraft charge include setting low-balance alerts or agreeing to automatic transfers from other accounts.
And lastly, while overdraft protection prevents your transactions from being declined, the fees can add up fast and quietly drain your account. Opting out eliminates that risk.
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
National Financial Educators Council (1); IMF (2); Consumer Financial Protection Bureau (3), (13), (14); Federal Reserve Bank of New York (4); Federal Reserve Bank of St. Louis (5); LendingTree (6); Research & Markets (7); Bank of America (8); Loopme (9); YouGov (10); eMarketer (11); Ramsey Solutions (12)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.