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A number of complications can get in the way of financial goals. Maybe you\u2019ve been made redundant, you face an unexpected expense, or your savings are hit by an economic downturn. While some things are out of your control, financial milestones are often missed because of avoidable mistakes. In some cases, savers may not even realise where they\u2019re going wrong.<\/p>\n
According to the latest Eurobarometer survey on the subject, 18% of EU citizens display a high level of financial literacy. That\u2019s compared to 64% who hold a medium level, and 18% who have a low level of knowledge. Only about a quarter of the respondents answered at least four out of five questions on financial knowledge correctly.<\/p>\n
Want to get smarter with your money but don\u2019t know how? Euronews has compiled some simple financial mistakes to avoid, collected from conversations with experts.<\/p>\n
Don’t hold too much in cash<\/p>\n
\u201cKeeping a buffer for emergencies makes sense. But beyond that, large cash holdings lose value over time,\u201d said Andy Newland, spokesperson for Blacktower Financial Management.<\/p>\n
Keeping money locked away in your bank account, rather than investing it in shares and bonds, means that your purchasing power is eroded away by inflation.<\/p>\n
For this reason, long-term goals usually need a combination of cash and investment strategies.<\/p>\n
Don’t delay retirement planning<\/p>\n
\u201cWaiting to plan for retirement means missing out on the most valuable asset: time,\u201d added Andy Newland, stressing that investments should be given time to grow.<\/p>\n
\u201cEarly contributions \u2014 even small ones \u2014 have more impact than larger amounts added later. The sooner a plan is in place, the greater the flexibility and potential benefit.\u201d<\/p>\n
This is partly thanks to compound interest. This means you\u2019re not only earning extra on your original savings, but you\u2019re generating interest on the interest already earned.<\/p>\n
Saving into a pension pot can also provide tax relief, and you\u2019ll also be able to capitalise on employer contributions through a workplace pension.<\/p>\n
Don’t ignore tax implications<\/p>\n
Tax rules differ across countries, and wrapping your head around them can be tricky if you\u2019re not an expert.<\/p>\n
Even so, a proactive approach to tax planning can allow you to be smarter with your money, as you\u2019ll be able to make the most of tax relief where available.<\/p>\n
\u201cThis is especially true when living or working across borders,\u201d said Andy Newland.<\/p>\n
While there is lots of free tax advice available online, experts suggest contacting an adviser for the most reliable information.<\/p>\n
Don’t ignore credit health<\/p>\n
A credit score is a number that indicates your reliability in the context of borrowing money.<\/p>\n
It\u2019s based on your financial history, notably how you\u2019ve managed bills and debts in the past.<\/p>\n
\u201cCredit scores affect more than just borrowing \u2014 they can influence housing, employment, and insurance. Regular checks and simple actions like paying on time, reducing unnecessary credit, and correcting errors can make a meaningful difference,\u201d said Andy Newland.<\/p>\n
Don’t invest without a strategy<\/p>\n
When it comes to moving money out of savings accounts, experts also say investments should be chosen wisely.<\/p>\n
\u201cIt\u2019s easier than ever to invest, but platforms don\u2019t replace planning,\u201d explained Newland.<\/p>\n
\u201cActing on trends, social media tips, or fear of missing out often leads to poor outcomes. Investing works best when it\u2019s structured, consistent, and aligned with long-term objectives.\u201d<\/p>\n
For those who are new to investing, banks can offer tailored advice and investment services. Putting your money into funds that mirror major indexes can also be a fairly safe option, as these products provide broad market exposure.<\/p>\n
Don’t forget to budget and track spending<\/p>\n
Many people \u201cassume they understand their financial situation better than they actually do\u201d, Sebastian Franke, consumer economist with ING, told Euronews.<\/p>\n
He pointed to a 2022 survey carried out by ING, which showed that more than half of respondents agreed with the statement: \u201cI\u2019m good at managing my money.\u201d Only 16% of respondents, surveyed across seven European countries, disagreed with the statement.<\/p>\n
Even so, when people were asked what they actually do to get a grip on their finances, the top answer was \u201cI use my memory or gut feeling\u201d, said Franke.<\/p>\n
He suggested that consumers should track expenses to avoid impulsive spending.<\/p>\n
Revolving credit cards, buy-now-pay-later schemes and zero-interest financing are also danger areas, explained Franke, as consumers may not be aware of how much debt they are amassing.<\/p>\n
Don\u2019t fall foul to mental accounting<\/p>\n
When it comes to budgeting, Franke explained that consumers often make irrational decisions by creating mental labels for money, rather than stepping back to see the big picture.<\/p>\n
In other words, people often treat money differently based on factors such as its intended use or its source.\u00a0<\/p>\n
\u201cThink of having saved \u20ac25,000 for a dream vacation you want to take 5 years from now in a savings account that pays 3% interest \u2013 and then buying a \u20ac25,000 car with a 5-year loan priced at an interest rate of 7%.\u201d<\/p>\n
The smartest thing to do would be to take the money from savings for the car, instead of taking out the loan, even if it means saving up again for the holiday.<\/p>\n
Don’t make emotional investment decisions<\/p>\n
Holding your nerve and not making rash decisions when investing is also important, said Jake Barber, investment adviser at SJB Global.<\/p>\n
\u201cIn 2020 and 2022, lots of our clients told us they wanted to liquidate all of their funds into cash. That\u2019s the worst decision they could have made\u2026you want to buy in the bad news,\u201d he explained.<\/p>\n
By selling funds while the market is down, this means investors lock in losses, when indexes will at some point rise again. Buying when prices are low can actually be a good idea in the long term, as your purchasing costs will be low and you will be set to profit from gains.<\/p>\n
Don\u2019t try to time the market<\/p>\n
Even so, this doesn\u2019t mean you should jump in and out of specific stocks as a non-experienced investor, said Barber.<\/p>\n
\u201cTiming the market is even a very difficult thing to do for somebody who does it as a full-time job\u2026 As someone without experience, you don\u2019t want to be buying single stocks, because then you do have to know when is the right time to buy and sell. Buying, for example, a global index would be a much easier strategy.\u201d<\/p>\n
A reminder, the information in this article does not constitute financial advice, always do your own research on top to ensure it’s right for your specific circumstances. Also remember, we are a journalistic website and aim to provide the best guides, tips and advice from experts. If you rely on the information on this page then you do so entirely at your own risk.<\/p>\n","protected":false},"excerpt":{"rendered":"ADVERTISEMENT A number of complications can get in the way of financial goals. Maybe you\u2019ve been made redundant,…\n","protected":false},"author":2,"featured_media":130080,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[51,474,7974,1197,2499,3028,6638,6384,16,15],"class_list":{"0":"post-130079","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-financial-literacy","11":"tag-investment","12":"tag-personal-finance","13":"tag-savings","14":"tag-shares","15":"tag-stock-exchange","16":"tag-uk","17":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114567299922399445","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/130079","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=130079"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/130079\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/130080"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=130079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=130079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=130079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}