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A lack of confidence could cost you money, says expert — here's how to fix the problem

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Lots of people get freaked out when trying to make the right money moves. In many cases, that lack of confidence means that they make no move at all. And that can be costly.

Having confidence in your decisions, particularly financial ones, is essential to reaching your financial goals, experts say. Here's why, and what you can do to feel more capable.

Confidence is the key

It's natural to worry about making a mistake and losing money. But worrying too much can leave you paralyzed. A study conducted by Principal last year shows that more than half of Americans haven't made a single major financial decision within three years. That includes big purchases, moving money into a retirement plan, or rebalancing a portfolio.

"We learned that 70% of people postpone a hard financial decision," Jerry Patterson, senior vice president of retirement at investment plan provider Principal, recently told Grow. "The greatest driver of taking action — it's not how much you make, it's not how much debt you have. It's confidence."

Sitting still can cost you

Holding yourself back from making financial decisions, such as investing in the stock market, can hold you back from making real money. If you invested $500 in the stock market five years ago, for example, you'd have a little more than $800 today, according to Grow calculations. If you were too hesitant to invest, though, you'd have missed out on a return of more than 60%.

Similarly, as the Fed cuts rates, you may be missing out on the chance to save money by refinancing your mortgage. "The Fed cutting rates should capture the attention of homeowners who wouldn't normally follow interest rates very closely," Keith Gumbinger, vice president at HSH.com, told Grow earlier this year.

All told, taking on a more active role with your finances — by refinancing your debt, for example, or occasionally rebalancing your investment portfolio — can save you money.

How you can become more confident with your money

So, how do you build the confidence to handle your finances? An easy way to start is to practice. By taking small steps — like beginning to invest in a retirement account, or keeping up with the news and doing some background reading to understand what it all could mean for you — you will likely feel more comfortable making big financial decisions.

"You may not be able to become a 'supersaver' today, but little steps will get you closer," Patterson says.

Here are a few things you can do to start feeling more capable:

Create a budget. By tracking your spending and then sitting down to create a financial plan for yourself, you'll likely feel better about your ability to understand and control where your money goes. That could translate to more confidence in dictating your saving and investing strategies, too.

Taking action, like by creating a budget, can give you a sense of accomplishment and help relieve some of the stress associated with your finances.

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Automate. Use technology to offload the responsibility of remembering to make various financial decisions. When it comes to your 401(k), for example, you can sign up for auto-increase, which will automatically bump up how much you're saving every year by 1%.

Work with a professional. A great way to build confidence is to work with a professional, like a certified financial planner or a financial advisor. There are more affordable options out there, perhaps even where you do your banking. "Many firms and banks offer financial planning without a charge if you're a client or customer," Rich Ramassini, a certified financial planner and senior vice president at PNC Investments told CNBC last spring. "Planning is not always costly."

But failing to act or take charge of your finances can be.

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