Common mistakes about money

According to CNBC experts, a lack of planning and specific goals are the two most common mistakes in personal financial management.

Making financial mistakes can be frightening and seem like a disaster. Experts say some financial missteps have the potential to change a person's future. However, there are still many ways to prevent or avoid them. Among them, a lack of planning and not having specific goals are two of the most common mistakes.

James McManus, chief investment officer of online asset management service Nutmeg, told CNBC that research shows people who group their savings and investments into clear goals are more likely to stick with them. "You're more likely to sustain savings or weather short-term market fluctuations if that new home, dream trip, or once-in-a-lifetime experience is clearly in your mind," she shared.

Having clear financial plans and goals also helps focus on the long term, which is crucial in personal financial management, according to Emma-Lou Montgomery, Vice President of Personal Investment at Fidelity International. "The most common financial mistake is trying to 'win big,' anticipating and reacting immediately to market fluctuations. All of this can be avoided by having a long-term perspective," she added.

According to this expert, another common mistake when investing is adopting an "all or nothing" approach. She notes that even small investments and basic knowledge can be enough to make us rich.

Furthermore, many common financial mistakes involve losing or spending money instead of earning it. Myron Jobson, a senior personal finance analyst in the US, suggests that paying off debt, such as rent and bills, should be a priority. Not having a "safety net" is a dangerous but common mistake.

"Keeping cash provides peace of mind if something goes wrong. This is the money that will cover you if something unexpected happens, your car breaks down, or you lose your job," he advised.

Prioritizing spending over saving is one of the most common mistakes in personal finance. (Image: CNBC) — Prioritizing spending over saving is one of the most common mistakes in personal finance. (Image: *CNBC)*

Many of the mistakes mentioned above may only have short-term consequences. But experts say there's one thing that's often overlooked and can follow you for much of your life: a bad retirement plan.

According to McManus, when you're young, retirement seems like something too far away, and when faced with other immediate financial needs, retirement is often something we put off.

In reality, most people will eventually retire. At any age, we need to build a sufficiently large home to live in. Therefore, experts advise that if you skip retirement, you will make things difficult for yourself later.

In addition to carefully considering social security contributions, everyone should set aside a sum, perhaps a relatively small amount, for a personal retirement fund. Doing this while young can make a life-changing impact in retirement, experts say. According to Montgomery, consistently saving and investing for retirement and ensuring you have more money set aside as your income increases is crucial.

After all, experts say that making financial mistakes can feel overwhelming. But that's perfectly normal.

"When mistakes happen, the key is to learn from them and avoid making the same mistake again. Whether it's overspending or forgetting to set aside your savings this month, don't be too hard on yourself," Montgomery advises.

Experts say that mistakes can often be corrected. The important and fundamental thing is that you must take responsibility for your own financial situation.

Jobson suggests tracking spending habits on a spreadsheet or through third-party budgeting tools. "Once you have a better understanding of how you spend your money, you can discover ways to optimize your personal finances," he says.

Finally, learning and gaining a broader understanding of your personal finances can also make a big difference. According to her, knowledge is power, and ensuring you understand all aspects of your financial situation will help you prioritize and make informed decisions to support your bigger goals.

Xiao Gu (according to CNBC )

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