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August 24, 2016 - Recovering From Financial Mistakes

August 24, 2016

We’ve all made financial mistakes. Whether it’s living beyond our means and accumulating debt, buying a too-expensive house, saving too little for the future, or any other blunder – we’ve all been there. Here are some tips for learning from these errors and moving on:

Forgive yourself. It’s easy to beat yourself up over things you did or didn’t do. Try to let go of those negative feelings and think about how you’re going to learn from your actions. Think about what you would say to a close friend who confessed a similar error; give yourself the same support and forgiveness you would offer a loved one.

Speak the truth about your mistake. Being honest and forthright with yourself, your loved ones, and your financial professional is a powerful step on the road to recovery. While it can be hard to share something you’re not proud of, the act of sharing can help rally your team around you and hold you accountable, helping you avoid the same mistake again.

Take inventory and create a strategy to recover. Ask yourself these questions:

  • How big is the problem?
  • What financial resources can I commit to fixing it?
  • Who do I need to talk to?
  • What is my ultimate goal?
  • What steps do I need to take to achieve that goal?

If you don’t know the full financial ramifications of your mistake, sitting down and defining it in terms of dollars and cents can help you overcome paralysis and feel in control again. If you need advice, consult your financial professional who can help you create a recovery plan and put you on the path to financial success.

Understand why you made the error. We all have beliefs, codes, and mental scripts that underpin our financial decisions. Sometimes, we don’t even realize we have a belief or script until it leads us into making an error. Take the time you need to process your mistake and try to unearth the root of it.

Turn your mistake into a teaching moment. Once you understand the underlying cause of your problem, think about what you can do to prevent yourself from making that same mistake (or series of mistakes ever again).