You could probably fill a book (or two) with all of the words of wisdom we hear on a daily basis from financial experts. Some are shockingly simple. Others more complex; requiring a lot more thought and energy to get results.

The simple rules are usually the best. If I had to choose the single most important financial ‘rule’, it would be this:

Spend less than you earn.

There is nothing new or original about this ‘rule’. In fact, it is so simple it might be described as blindingly obvious.

Until you accept this simple financial rule, there is little sense in pursuing the complicated stuff. Time and money spent on learning the secrets of the investment experts or sitting in workshops listening to salespeople exposing the virtues of becoming a property millionaire is likely to be wasted until you get this under your belt.

Spend less than you earn.

In practical terms this means budgeting and making sure your net (after tax) income consistently exceeds your committed and discretionary expenditure.

Getting this right often means a) cutting your expenditure, b) increasing your income, or c) a combination of the two. The wider you can make this gap (in a positive sense), the better. It then matters what you do with the surplus income each month.

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice. You can follow him on Twitter @martinbamford.

This is rarely the fault of the person making the mistake. Unless you have made the effort to acquire a financial education, or you have been fortunate enough to have a great teacher, there is a reasonably good chance that the education system has failed you in this regard.

The absence of formal financial education to a high standard at school simply positions millions of people to fall into the same old traps with their money.

There are (at least) ten money mistakes that people seem to make on a regular basis. Knowing what they are should help you avoid them in the future and improve your chances of making brilliant decisions instead.

1 – You don’t know what you spend each month.

Failing to budget is a common financial mistake to make. Getting your household budget together, and then sticking to it consistently, is one of the most positive financial steps you can take.

A budget does not have to be complex; in fact, keeping it simple means you are more likely to use it.

2 – You know more about your house than you know about your pension.

Ask a typical person about their house and chances are they will be able to give you chapter and verse in response. Ask about their pension fund and you are more likely to be met with a blank expression.

For most people, their pension fund is their second largest asset. Start taking an interest. After all, it is your pension fund that will enable you to maintain your current lifestyle in retirement.

Investing some time now to understand and then take control of your pension fund will pay dividends in later life – a time when you might wish you have bothered to make more of an effort when you were younger.

3 – You follow the herd.

You can always spot a ‘golf course’ investor. Their portfolio contains every flavour of the month investment fund from the last decade, usually purchased just as the fund finished delivering stellar returns for the final time before crashing. It might not have been the golf course where they picked up their latest hot investment tip, but they have been getting the ideas from somewhere.

It rarely makes sense to follow the herd when it comes to investing money. Just because a fund was right for someone else does not necessarily make it right for you. In fact, in the world of investing it is often the contrary position which gets the best results.

4 – You avoid facing up to the unpleasant stuff.

Nobody enjoys thinking about their own death or the death of a family member. Yet when it comes to smart financial planning, this is a crucial subject to consider.

Avoiding the topic of death (or illness, disability, etc) can leave you or your family dangerously exposed should the worst happen. Put any irrational fears to one side – you are not going to die because you have made a will or set up some life assurance cover. You might even find that thinking about death and dealing with the associated financial planning issues will enable you to sleep more soundly at night.

5 – You fail to shop around.

In the world of financial services, there is a huge gap between the best deal and the worst deal. It is also the case that a single product provider is rarely the most competitive for every type of product.

When you fail to shop around for the best (which is not always the cheapest) deal, you expose yourself to uncompetitive and potentially wasteful financial products.

The Internet makes this form of whole of market comparison quick and easy. If in doubt, engage the services of a professional independent financial adviser. In addition to finding you the best deal they will also ensure that you are taking the most appropriate course of action.

6 – You do things once and never review them.

Things change and because things change, you need to review and then make changes to your personal finances at regular intervals. The policy you set up today is unlikely to remain on track or invested in suitable funds when you reach retirement in the future.

A regular review of your finances is an important discipline to adopt. As a minimum you should be sitting down to review everything at least once a year. If you are following a complicated investment strategy then quarterly or even monthly might be more appropriate.

Decide on your review strategy, put a date in your diary and then stick with it.

7 – You follow financial advice blindly.

Financial advice is precisely that – advice. Whilst you should be able to trust the advice from a professional independent financial adviser (assuming they are well qualified and impartial) it is essential to understand the advice you are receiving and relate it back to your personal circumstances, goals and objectives.

In in doubt, ask more questions. A good financial adviser will never end a meeting until they are satisfied that you understand not only the recommendation but also all of your options along with the advantages and disadvantages associated with each of these. Always keep in mind that financial advice is advice not an instruction.

8 – You don’t have clear goals.

Unless you have specific goals in life, it is difficult to make consistently brilliant financial decisions. The choices you make about your money should always relate to wider life goals. When you make financial decisions that are not linked to goals, it is difficult to measure success.

When people know what they really want out of life, the associated decisions about their finances come naturally.

9 – You never read the small print.

Consumer protection in retail financial services is streets ahead of where it has been at any time during the last twenty years. The Financial Services Authority (FSA) takes a tough stance with any adviser or financial institution not treating their customers fairly. This is an important regulatory principle which should ensure a favourable outcome for the majority of consumers.

This is not to say that you can sign-up for financial products or services without reading the small print and always expect to have a smooth ride. The small print is often dull and sometimes filled with legal jargon, but it is always worth reading.

Regulated financial firms have to produce a Key Facts document which describes the most important issues to consider. Always read this document and, if possible, read the more detailed terms and conditions as well. If in doubt, ask questions about the terms and ensure you get a satisfactory answer (preferably in writing) before you sign on the dotted line.

10 – You make impulsive financial decisions.

Making impulsive financial decisions costs money. It probably means that you have not taken the time to weigh up all of the options or shop around to get the best deal. In short, it usually makes sense to step back from an impulsive financial decision, take a few deep breaths and revisit it later.

Another good reason for never rushing when it comes to money decisions is the risk of fraud or other scams. Fraudsters like to place their victims under pressure to make a fast decision. Any pressure like this should set alarm bells ringing and cause you to walk away from a deal.

Martin Bamford is Site Editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice. You can follow him on Twitter @martinbamford.

Pension tax relief is often misunderstood, so the new (and interim) rules on this are anything but simple.  Here is our hopefully quite simple guide to higher earners and pension tax relief.

The way it was

Before the Budget, higher earners received higher rate income tax relief on their personal contributions to a pension plan.  This tax relief was applied in two parts.

Basic rate tax relief (at 20%) was added directly to the pension fund when a personal contribution was made.  In practical terms, this means that a £1,000 net contribution to a UK registered pension scheme would receive £250 of basic rate tax relief, so £1,250 would end up in the pension fund.

Higher rate taxpayers were then able to claim the difference between basic and higher rate income tax relief on their contributions.  This difference is currently 20%, so that same £1,000 net pension contribution would enable the higher rate taxpayer to claim additional tax relief of £250, making the total tax relief £500, or an £750 net contribution resulting in an investment in the pension fund of £1,250.

What changed?

The new rules announced in the Budget earlier this year will result in pension tax relief limited to 20% for people earning over £180,000 a year.  In fact, the amount of income tax relief on offer will start to reduce once you earn £150,000 a year, being tiered down to reach 20% once earnings hit £180,000.

In the meantime, and to prevent any short-term abuse of the system before the new rules come into force, some interim measures were introduced.  These are known as anti-forestalling measures.

It is important to note that these anti-forestalling measures only apply to people who are categorised as ‘high income individuals’.  To get this special label attached, you need to have ‘relevant earnings’ of £150,000 per annum in this or either of the previous two tax years.

‘Relevant earnings’ is a fairly catch-all phrase, and includes income from employment and self-employment, savings interest and dividends. You have to add back in any earnings which have been sacrificed as part of a salary sacrifice arrangement with your employer but you can subtract pension contributions up to £20,000 made by the individual (but not employer pension contributions).

I’m a ‘high income individual’ – so, what now?

Assuming that you fall into the definition described above, you become subject to a special annual allowance. This is an annual tax allowance which places restrictions on the income tax relief you can get on your pension contributions.

The special annual allowance is one of three numbers. Firstly, there is a basic allowance of £20,000.

Secondly, there is an enhanced allowance of up to £30,000 which can be applied if you have made infrequent pension contributions (less often than quarterly). This enhanced allowance is calculated as the lower of average contributions made in the three tax years in the three tax years 2006/07, 2007/08 and 2008/09 and £30,000.

Finally, you might have a protected pension input amount. This is calculated based on your regular (quarterly or more frequently) pension contributions before 22nd April 2009, the date these anti-forestalling measures came into force.

Regardless of which level of special annual allowance applies, it will apply to both your personal and employer pension contributions.

What happens if more goes into my pension?

If you and/or your employer happens to contribute more to a pension, either before the end of this tax year or during the 2010/11 tax year, it is not the end of the world. The penalty is a special annual allowance tax charge.

The special annual allowance tax charge is a tax charge made on the individual at a rate of 20% for the 2009/10 tax year. What this means in practice is that you lose your higher rate income tax on those parts of the pension contributions above your special annual allowance.

This might not feel too bad if it is personal contributions at stake. It will simply mean you claim for and pay back any higher rate income tax relief on contributions over the level of the special annual allowance. Where it is employer pension contributions, you might feel a bit unhappy about having to pay a 20% tax charge on money you never actually received in your pocket.

What next?

This is only a basic guide and you should seek professional independent financial advice if there is a chance you have been caught up in these new or interim rules.

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice. You can follow him on Twitter @martinbamford.