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.

We think that there are five common mistakes made by investors. These are the Cardinal Sins you need to avoid when investing your money. Understand these common mistakes and you stand a much better chance of being an investment winner.

1 – You pick funds or stocks based on their past performance

You will probably be familiar with the investment risk warning which explains that past performance is not necessarily a guide to the future. It is quoted by fund managers and investment advisers for a very good reason – it is true!

If you make your investment decisions based on past performance alone, you are likely to be very disappointed. Past performance is a great guide to where an investment has been but a lousy indicator of where it is likely to go next.

We often see ‘performance chasing’ where people invest near the top of an investment market, having just watched it shoot up in value. More often than not there is only one direction left for the investment to go, and it isn’t up!

Various studies have shown past performance to be an unreliable indicator of future performance. Others have demonstrated that funds which have outperformed a benchmark in the past are actually less likely to do well in the future.

2 – You try to ‘time’ the markets

If you believe that you can accurately and consistently pick the most appropriate time to invest your money, you are probably delusional. It can be tempting to delay making an investment, particularly when an investment market is volatile. The last thing you would want to do is invest today only to find out the market was cheaper tomorrow or next week.

The problem with trying to time your investments is it is too easy to miss out on the gains. The best stockmarket gains tend to happen very quickly, just as the most severe stockmarket falls are often concentrated in a relatively short period of time. Trying to time the markets can therefore result in you missing out on any fast recovery.

The best study looking at this was conducted by Fidelity. They looked at UK, US and other stockmarket performance between 1994 and 2009. They found that by simply missing a few of the best days of performance the overall result could be substantially different. Over the fifteen year period in the FTSE All Share Index, missing out on the ten best performing days would have resulted in a portfolio worth 46% less than one fully invested throughout the period.

The golden rule for investment is that it is ‘time in’ the markets that counts, not ‘timing’.

3 – You invest in things you do not understand

Investing money should be simple. At the most basic level, you have a choice between cash, fixed interest securities, company shares (equities) and property. The more risk you decide to take with your money, the better chance you have of higher returns.

Many investors try to overcomplicate things. They look for exotic investment ‘opportunities’ with the hope of breaking the unbreakable link between risk and reward. They are attracted by the prospect of double digit annual returns with seemingly no danger to their capital.

You should only ever invest in things you understand. Always apply the ‘ten minute bin test’ to your investment decisions. If you cannot fully understand an investment prospectus after ten minutes of reading, throw it in the bin and walk away.

The most effective investment portfolios are often the simplest ones. There is no need to chase complex investments when you have so much choice from the conventional range of investment asset classes. KISS – Keep It Simple (Stupid).

4 – You have too much diversification in your portfolio

Whilst you should never keep all of your financial eggs in one basket, there is also a danger that you can become too diversified when investing your money.

The idea of a diversified investment portfolio is to invest in ‘negatively correlated’ investment assets. This means that when one investment moves down, the others should move up, and vice versa. The impact of this negative correlation within an investment portfolio is what reduces the overall level of risk in a well diversified basket of investments.

As with anything in life, you can take this concept too far. More and more diversification with your investments will drive up costs, diminish the prospects for returns and make the business of managing your investments incredibly stressful.

5 – You never review your investments

Whilst there is a good argument for keeping your money invested for as long as possible, a regular review is also important. Things change over time when you invest money. These things include the overall asset allocation of your portfolio which can result in you taking more or less risk than you should be. Asset allocation changes occur naturally when different investment asset classes perform differently over time.

A regular review of your investments is also a good opportunity to identify and replace underperforming funds. Even with the best fund selection process in the world, it is possible to pick a dud from time to time. Fund managers go off the boil or change companies. Sometimes their strategies just don’t suit the current market conditions.

Rather than hanging onto an underperforming fund waiting for a miraculous turnaround, modern financial products make it simple and very cheap to cut your losses and move to a more suitable alternative. With most pension and investment wrappers these days you have the choice of an extensive range of funds from leading fund managers. Use a regular review of your investments as an excuse to ditch the laggards and appoint those with better prospects.

Martin Bamford is site editor of BrilliantWithMoney and a Chartered Financial Planner at Informed Choice.