According to CNBC experts, lack of a plan and no specific goals are the two most common mistakes in personal financial management.
Making money mistakes can be scary and seem like a disaster. Experts say some financial mistakes really have the power to change a person's future. However, we still have many ways to prevent or avoid getting infected. Of these, lack of planning and no specific goals are the two most common mistakes.
James McManus – Investment Director of online wealth management service Nutmeg, told CNBC that, Research shows that people who group their savings and investments into clear goals are more likely to stick with it. "You're more likely to maintain your savings or weather short-term market swings if your new home, dream trip or once-in-a-lifetime experience comes to mind," she says.
Having a clear financial plan and goals also helps to focus on the long-term, which is so important in personal financial management, says Emma-Lou Montgomery, vice president of personal investing at Fidelity International. “The most common financial mistake is trying to 'hit fast, win fast', anticipating and reacting to market volatility. All can be avoided by taking a long-term view,” she added.
According to this expert, another common mistake when investing is adopting a "win-win" approach. She notes that even small investments and basic knowledge can make us rich.
Besides, a lot of common money mistakes have to do with losing or spending money instead of making it. Myron Jobson - senior personal finance analyst in the US - thinks that paying off debt, such as rent and bills, should be a priority. Not having a pocket fund 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 goes wrong, your car breaks down or you lose your job,” he advises.
Prioritizing spending over saving is one of the most common personal finance mistakes. Image: CNBC
Many of these mistakes may have short-term consequences. But experts say there's one thing that's often overlooked and can follow you for most of your life: lousy retirement planning.
According to McManus, when you're young, retirement can seem like a distant thing, and in the face of other immediate financial needs, retirement is often something we put off.
In fact, most people will eventually retire. At any age, we also need to build a nest big enough to live in. Therefore, experts advise that if you skip retirement, you will make it difficult for yourself later.
In addition to taking a close look at the social insurance section, each person should spend a sum, which may be relatively small, on an individual retirement fund. Doing it young can be life-changing when you retire, experts say. According to Montgomery, it's very important to save and invest for retirement consistently and make sure to put more money aside as income grows.
After all, experts say that making money mistakes can leave you feeling overwhelmed. But that is very normal.
“When mistakes happen, the key is to learn and avoid falling into the same situation. Whether it's overspending or forgetting to put aside your savings this month, don't blame yourself too much," advises Montgomery.
Experts say mistakes can often be corrected. It is important and fundamental that you 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 learning to become more aware of your personal financial situation can also make a big difference. Knowledge is power, and making sure you understand every aspect of your financial situation will help you prioritize and make informed decisions to support your big goals.
Little Gu (follow CNBC)
