ADVERTISEMENTA number of complications can get in the way of financial goals. Maybe you’ve 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’re going wrong.
According to the latest Eurobarometer survey on the subject, 18% of EU citizens display a high level of financial literacy. That’s 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.
Want to get smarter with your money but don’t know how? Euronews has compiled some simple financial mistakes to avoid, collected from conversations with experts.
Don’t hold too much in cash
“Keeping a buffer for emergencies makes sense. But beyond that, large cash holdings lose value over time,” said Andy Newland, spokesperson for Blacktower Financial Management.
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.
For this reason, long-term goals usually need a combination of cash and investment strategies.
Don’t delay retirement planning
“Waiting to plan for retirement means missing out on the most valuable asset: time,” added Andy Newland, stressing that investments should be given time to grow.
“Early contributions — even small ones — have more impact than larger amounts added later. The sooner a plan is in place, the greater the flexibility and potential benefit.”
This is partly thanks to compound interest. This means you’re not only earning extra on your original savings, but you’re generating interest on the interest already earned.
Saving into a pension pot can also provide tax relief, and you’ll also be able to capitalise on employer contributions through a workplace pension.
Don’t ignore tax implications
Tax rules differ across countries, and wrapping your head around them can be tricky if you’re not an expert.
Even so, a proactive approach to tax planning can allow you to be smarter with your money, as you’ll be able to make the most of tax relief where available.
“This is especially true when living or working across borders,” said Andy Newland.
While there is lots of free tax advice available online, experts suggest contacting an adviser for the most reliable information.
Don’t ignore credit health
A credit score is a number that indicates your reliability in the context of borrowing money.
It’s based on your financial history, notably how you’ve managed bills and debts in the past.
“Credit scores affect more than just borrowing — 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,” said Andy Newland.
Don’t invest without a strategy
When it comes to moving money out of savings accounts, experts also say investments should be chosen wisely.
“It’s easier than ever to invest, but platforms don’t replace planning,” explained Newland.
“Acting on trends, social media tips, or fear of missing out often leads to poor outcomes. Investing works best when it’s structured, consistent, and aligned with long-term objectives.”
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.
Don’t forget to budget and track spending
Many people “assume they understand their financial situation better than they actually do”, Sebastian Franke, consumer economist with ING, told Euronews.
He pointed to a 2022 survey carried out by ING, which showed that more than half of respondents agreed with the statement: “I’m good at managing my money.” Only 16% of respondents, surveyed across seven European countries, disagreed with the statement.
Even so, when people were asked what they actually do to get a grip on their finances, the top answer was “I use my memory or gut feeling”, said Franke.
He suggested that consumers should track expenses to avoid impulsive spending.
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.
Don’t fall foul to mental accounting
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.
In other words, people often treat money differently based on factors such as its intended use or its source.
“Think of having saved €25,000 for a dream vacation you want to take 5 years from now in a savings account that pays 3% interest – and then buying a €25,000 car with a 5-year loan priced at an interest rate of 7%.”
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.
Don’t make emotional investment decisions
Holding your nerve and not making rash decisions when investing is also important, said Jake Barber, investment adviser at SJB Global.
“In 2020 and 2022, lots of our clients told us they wanted to liquidate all of their funds into cash. That’s the worst decision they could have made…you want to buy in the bad news,” he explained.
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.
Don’t try to time the market
Even so, this doesn’t mean you should jump in and out of specific stocks as a non-experienced investor, said Barber.
“Timing the market is even a very difficult thing to do for somebody who does it as a full-time job… As someone without experience, you don’t 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.”
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.
