Finance
Here are some big money blind spots you need to avoid, advisors say
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Managing one’s personal finances can seem like a hodgepodge of never-ending checklists and rules of thumb.
With all sorts of financial considerations vying for attention — budgeting, saving, paying off debt, buying insurance, being savvy shoppers — consumers may inadvertently overlook some important nuggets.
Here are some of the biggest financial blind spots, according to several certified financial planners on CNBC’s Digital Financial Advisor Council.
1. Credit scores
Consumers often don’t understand the importance of their credit score, said Kamila Elliott, CFP, co-founder and CEO of Collective Wealth Partners based in Atlanta.
The score impacts how easily consumers can get a loan — like a mortgage, credit card or auto loan — and the interest rate they pay on that debt.
The number generally ranges from 300 to 850.
Credit agencies like Equifax, Experian and TransUnion determine the score using a formula that accounts for factors like bill-paying history and current unpaid debt.
Lenders are generally more willing to give loans and better interest rates to borrowers with credit scores in the mid- to high-700s or above, according to the Consumer Financial Protection Bureau.
Let’s say a consumer wants a $300,000 fixed mortgage for a 30-year term.
The average person with a credit score between 760 and 850 would get a 6.5% interest rate, according to national FICO data as of April 1. By comparison, someone with a score of 620 to 639 would get an 8.1% rate.
The latter’s monthly payment would cost $324 more relative to the person with a better credit score — amounting to an extra $116,000 over the life of the loan, according to FICO’s loan calculator.
2. Wills
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Wills are basic estate planning documents.
They spell out who gets your money after you die. Wills can also stipulate who will take care of your kids and oversee your money until your children turn 18.
Planning for such a grim event isn’t fun — but it’s essential, said Barry Glassman, CFP, founder and president of Glassman Wealth Services.
“I’m shocked by the number of well-to-do families with kids who have no will in place,” Glassman said.
Without such a legal document, state courts will choose for you — and the outcome may not align with your wishes, he said.
Taking it a step further, individuals can create trusts, which can assign more control over details like the age at which children gain access to inherited funds, Glassman said.
3. Emergency savings
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Choosing how much money to stash away for a financial emergency isn’t a one-size-fits-all calculation, said Elliott of Collective Wealth Partners.
One household might need three months of savings while another might need a year, she said.
Emergency funds include money to cover the necessities — like mortgage, rent, utility and grocery payments — in the event of an unexpected event like job loss.
A single person should generally try to save at least six months’ worth of emergency expenses, Elliott said.
That’s also true for married couples where both spouses work at the same company or in the same industry; the risk of a job loss occurring at or around the same time is relatively high, Elliott said.
Meanwhile, a couple in which the spouses make a similar income but work in different fields and occupations may only need three months of expenses. If something unexpected happens to one spouse’s employment, the odds are good that the couple can temporarily lean on the other spouse’s income, she said.
Business owners should aim to have at least a year of expenses saved since their income can fluctuate, as the Covid-19 pandemic showed, Elliott added.
4. Tax withholding
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Tax withholding is a pay-as-you-go system. Employers estimate your annual tax bill and withhold tax from each paycheck accordingly.
“Ten out of 10 people couldn’t explain how the tax withholding system works,” said Ted Jenkin, CFP, CEO and founder of oXYGen Financial based in Atlanta.
Employers partly base those withholdings on information workers supply on a W-4 form.
Generally, taxpayers who get a refund during tax season withheld too much from their paychecks throughout the year. They receive those overpayments from the government via a refund.
However, those who owe money to Uncle Sam didn’t withhold enough to satisfy their annual tax bill and must make up the difference.
People who owe money often blame their accountants or tax software instead of themselves, even though they can generally control how much is withheld, Jenkin said.
Someone who owes more than $500 to $1,000 may want to change their withholding, Jenkin said. That goes for someone who gets a big refund as well; instead, they may wish to save (and earn interest on) that extra cash throughout the year, Jenkin said.
Workers can fill out a new W-4 form to change their withholding.
They may wish to do so upon any major life event like a marriage, divorce or birth of a child to avoid surprises come tax time.
5. Retirement savings
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“I think people underestimate how much money they’re going to need in retirement,” Elliott said.
Many people assume their spending will decline when they retire, perhaps to roughly 60% to 70% of spending during their working years, she said.
But that’s not always the case.
“Yes, maybe the kids are out of the house but now that you’re retired you have more time, meaning you have more time to do things,” Elliott said.
She asks clients to envision how they want to spend their lives in retirement — travel and hobbies, for example — to estimate how their spending might change. That helps guide overall savings goals.
Households also don’t often account for the potential need for long-term care, which can be costly, in their calculations, she said.
President Donald Trump speaks before signing executive orders in the Oval Office on March 6, 2025.
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President Donald Trump says that tariffs will make the U.S. “rich.” But those riches will likely be far less than the White House expects, economists said.
The ultimate sum could have big ramifications for the U.S. economy, the nation’s debt and legislative negotiations over a tax-cut package, economists said.
White House trade adviser Peter Navarro on Sunday estimated tariffs would raise about $600 billion a year and $6 trillion over a decade. Auto tariffs would add another $100 billion a year, he said on “Fox News Sunday.”
Navarro made the projection as the U.S. plans to announce more tariffs against U.S. trading partners on Wednesday.
Economists expect the Trump administration’s tariff policy would generate a much lower amount of revenue than Navarro claims. Some project the total revenue would be less than half.
Roughly $600 billion to $700 billion a year “is not even in the realm of possibility,” said Mark Zandi, chief economist at Moody’s. “If you get to $100 billion to $200 billion, you’ll be pretty lucky.”
The White House declined to respond to a request for comment from CNBC about tariff revenue.
The ‘mental math’ behind tariff revenue
There are big question marks over the scope of the tariffs, including details like amount, duration, and products and countries affected — all of which have a significant bearing on the revenue total.
The White House is considering a 20% tariff on most imports, The Washington Post reported on Tuesday. President Trump floated this idea on the campaign trail. The Trump administration may ultimately opt for a different policy, like country-by-country tariffs based on each nation’s respective trade and non-trade barriers.
But a 20% tariff rate seems to align with Navarro’s revenue projections, economists said.
The U.S. imported about $3.3 trillion of goods in 2024. Applying a 20% tariff rate to all these imports would yield about $660 billion of annual revenue.
“That is almost certainly the mental math Peter Navarro is doing — and that mental math skips some crucial steps,” said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration.
Trade advisor to U.S. President Donald Trump Peter Navarro speaks to press outside of the White House on March 12, 2025 in Washington, DC.
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That’s because an accurate revenue estimate must account for the many economic impacts of tariffs in the U.S. and around the world, economists said. Those effects combine to reduce revenue, they said.
A 20% broad tariff would raise about $250 billion a year (or $2.5 trillion over a decade) when taking those effects into account, according to Tedeschi, citing a Yale Budget Lab analysis published Monday.
There are ways to raise larger sums — but they would involve higher tariff rates, economists said. For example, a 50% across-the-board tariff would raise about $780 billion per year, according to economists at the Peterson Institute for International Economics.
Even that is an optimistic assessment: It doesn’t account for lower U.S. economic growth due to retaliation or the negative growth effects from the tariffs themselves, they wrote.
Why revenue would be lower than expected
Tariffs generally raise prices for consumers. A 20% broad tariff would cost the average consumer $3,400 to $4,200 a year, according to the Yale Budget Lab.
Consumers would naturally buy fewer imported goods if they cost more, economists said. Lower demand means fewer imports and less tariff revenue from those imports, they said.
Tariffs are also expected to trigger “reduced economic activity,” said Robert McClelland, senior fellow at the Urban-Brookings Tax Policy Center.
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For example, U.S. companies that don’t pass tariff costs on to consumers via higher prices would likely see profits suffer (and their income taxes fall), economists said. Consumers might pull back on spending, further denting company profits and tax revenues, economists said. Companies that take a financial hit might lay off workers, they said.
Foreign nations are also expected to retaliate with their own tariffs on U.S. products, which would hurt companies that export products abroad. Other nations may experience an economic downturn, further reducing demand for U.S. products.
“If you get a 20% tariff rate, you’re going to get a rip-roaring recession, and that will undermine your fiscal situation,” Zandi said.
There’s also likely to be a certain level of non-compliance with tariff policy, and carve-outs for certain countries, industries or products, economists said. For instance, when the White House levied tariffs on China in February, it indefinitely exempted “de minimis” imports valued at $800 or less.
The Trump administration might also funnel some tariff revenue to paying certain parties aggrieved by a trade war, economists said.
President Trump did that in his first term: The government sent $61 billion in “relief” payments to American farmers who faced retaliatory tariffs, which was nearly all (92%) of the tariff revenue on Chinese goods from 2018 to 2020, according to the Council on Foreign Relations.
The tariffs will also likely have a short life span, diluting their potential revenue impact, economists said. They’re being issued by executive order and could be undone easily, whether by President Trump or a future president, they said.
“There’s zero probability these tariffs will last for 10 years,” Zandi said. “If they last until next year I’d be very surprised.”
Why this matters
The Trump administration has signaled that tariffs “will be one of the top-tier ways they’ll try to offset the cost” of passing a package of tax cuts, Tedeschi said.
Extending a 2017 tax cut law signed by President Trump would cost $4.5 trillion over a decade, according to the Tax Foundation. Trump has also called for other tax breaks like no taxes on tips, overtime pay or Social Security benefits, and a tax deduction for auto loan interest for American made cars.
If tariffs don’t cover the full cost of such a package, then Republican lawmakers would have to find cuts elsewhere or increase the nation’s debt, economists said.
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