Americans continue to worry about their finances. An increasingly complex financial world coupled with a decrease in financial literacy has caused many people to feel less confident about their financial future.  In fact, according to a recent FINRA National Financial Capability Study, more than half (53 percent) agree that thinking about their finances makes them anxious, and 44 percent feel that discussing their finances is stressful, with respondents ages 18-34 reporting the highest levels of stress (63 percent) and anxiety (55 percent). Money doesn’t necessarily have to be stressful and an awareness of the following money mistakes may help you avoid common traps that many Americans fall into.

Buying more house than you can afford: Remember, just because the bank will loan you the money doesn’t mean that you can afford to pay it back. Too often, people spend too much of their net income on their housing. While taking pride in home ownership is a good thing, ending up house-poor is not. Make sure you will still have at least 6 months of cash reserves and can save 10-15 percent of your income toward retirement after making your mortgage payment.  Buying a home should not be to the detriment of your long-term financial goals.

Tapping retirement accounts prior to retirement: Retirement accounts (hence the name) are meant to be drawn upon in retirement. Unfortunately, more and more pre-retirees are accessing their accounts early, leading to taxes and potential penalties.

In addition to derailing a retirement plan, accessing retirement accounts prematurely can result in a 10 percent penalty (if withdrawn prior to age 59½) and additional tax liability. Consider viewing your retirement account as "off limits" and unavailable for non-critical expenses.

Not knowing your number and failing to budget: There is no way to know how much you can save if you do not know how much you are spending. What is the best tool for gaining clarity on spending and saving ?— A budget of course. A budget is a tool meant to help bring financial awareness. The more aware you are aware of where your cash flow is going, the more proactive you will be in addressing financial waste (unnecessary expenditures) while earmarking funds toward your future goals.

Mishandling debt: Using debt and carrying balances from month to month often leads to compromising your future financial stability. Remember, credit card companies are in the business to make money, and using debt to purchase discretionary items exaggerates their true cost. For example, using a 24 percent credit card (many are as high as 36 percent) to purchase a computer for $699 could cost more than $1,100 depending on the length of time you carry a balance. Consider waiting until you can truly afford an item to make non-essential purchases.

Spending too much on automobiles: Just like your home, you must be careful not to spend too much on other big-ticket items. In fact, in many ways, overspending on a vehicle is even worse. Keep in mind, as soon as you drive off the lot you have lost thousands of dollars in depreciation. While a vehicle is a necessity for many, it is not necessary to overspend on this depreciating asset.

Not carrying proper insurance: Risk management is a critical component of any financial plan as it helps protect you against the many curve balls life can throw at you. Life and disability insurance, health, property and casualty, long term care insurance and various insurances specific to a trade are just a few to consider. Review coverage annually to ensure that your coverage reflects your needs.

Overpaying for a college education: According to the Federal Reserve, student loan debt in the United States stands at more than $1.76 trillion dollars and is more significant than all outstanding credit card debt. According to the FINRA, Among student loan holders with payments due, 42 percent have been late with a payment at least once in the past year. Further, nearly half (47 percent) of Americans with student loan debt wish they had chosen less expensive colleges, and 48 percent are concerned they will not be able to pay off their student loans.  Starting your post-graduate career with excess debt is the equivalent of having to dig yourself out of a big financial hole.  While education is critical and often a determinant of future success, be careful to make the most of an investment on education.

Waiting until you are thinking about retirement to save for retirement: It stands to reason that it is human nature to address issues when you are affected by them. Too often, pre-retirees do not really ramp up their retirement savings until they are nearing retirement when it might be too late.  Retirement planning success is predicated on addressing the goal at a time when you really might not be that concerned about it.  In other words, consider beginning a retirement savings plan as soon as you enter the workforce not when you are planning on leaving it.

Passing away without proper estate planning documents: From a basic will and guardianship to powers of attorney, living wills and trusts, there are many important estate planning strategies to review. Unfortunately, many individuals pass away without a proper plan, leaving their heirs to try to pick up the pieces. Dealing with the loss of a loved one is challenging enough without having to address additional issues that could have been avoided.

While we all make financial mistakes and many of us wish we had made different choices, developing a plan to deal with issues before they arise may be beneficial as you pursue your goals.  Since everyone’s circumstances are unique, consider speaking to your financial, tax and legal adviser to determine the best financial approach for you.

Kurt J. Rossi, MBA, CFP®, AIF® is a CERTIFIED FINANCIAL PLANNERtm  & Wealth Advisor.  He can be reached for questions at 732-280-7550, & LPL Financial Member FINRA/SIPC.