The pencil lead is probably getting onto the side of your hand if its smudging all over your paper. Sadly, the only way you can prevent the smudging of pencils is by not putting your hand onto the paper, which is very hard to do if you're like me and are too lazy to remember.
Also, you could be using a really soft pencil. I, personally, prefer HB grade pencil over the darker, harder ones like 4H and 2H. The soft ones smear a lot.