No matter how financially disciplined or savvy you are, you’re still bound to slip up occasionally. Whether you’ve made a big or small financial mistake, forgiving yourself is important. It’s unlikely that one financial misstep is going to tank your financial future, so don’t beat yourself up or panic needlessly. Instead, check out these 5 tips and strategies to help you recover from a financial mistake.
The worst thing you can do when you make a financial mistake is beat yourself up about it! Ruminating about your blunder will drain you emotionally and prevent you from focusing on fixing the problem. To move forward and recover from your misstep, you have to let all that guilt and shame go.
Everybody makes financial mistakes. Messing up occasionally doesn’t make you incompetent or irresponsible, so stop all that negative self-talk and practice some self-compassion! Think about how you’d speak to a friend in the same situation. You’d probably reassure them and help them devise a plan of action to improve their finances, so extend that same grace to yourself.
Assess The Damage
You can’t determine how to address a financial mistake until you assess the damage. Although it’s difficult to confront your mistakes, sticking your head in the sand and ignoring the problem will only make the situation worse. Be brave and check your loan balance or credit card statement so you can make a plan to pay off any debt you’ve incurred. If you made a bad investment, you need to know how much money you lost for tax reasons, so don’t pretend it didn’t happen. Taking accountability for your misstep will likely make you feel better and more in control of the situation.
Make a Plan To Recover
The best way to recover from a financial mistake is to have a plan to dig yourself out of the debt you’ve incurred (or recover any money you’ve lost from bad investments). If you made a purchase you can’t afford and have started to regret it, see if you can return the item for a refund. Or maybe you can sell it on Facebook Marketplace to recoup some of the cost and use it to pay down your debt.
Tightening up your budget can also help you recover from overspending. Look at your fixed and variable expenses, and see if there’s anything you can cut back on. Can you cancel subscriptions and eat at home more so you have extra money to throw at your debt or rebuild your savings? Would you be willing to sell your car and get a cheaper used one? Any sacrifices you make now will pay off in the future when you’re debt-free, and your financial mistakes are in the rearview mirror.
View Financial Mistakes as Data
I bought Taylor Swift tickets on the resale market a few months ago. Because they were so in demand, I paid $800 for two tickets in the nosebleeds for my sister and I. Although we haven’t been to the concert yet, I regret this decision and consider it a financial mistake.
Every time Taylor performs, someone live streams it on TikTok, so I’ve seen her sing many of the songs already. Because there’s been so much media coverage, I also know all the tracks she’s going to play and the outfits she’s going to wear. I almost feel like I’ve been to the concert already!
If I knew I could experience so much of the concert for free, I probably wouldn’t have bought the tickets. But instead of beating myself up for wasting money, I’ve started to view my financial mistakes as data. Now I know that spending $800 on a popular concert isn’t worth it because the performance will likely end up online. With that knowledge, I’ll be able to make better decisions in the future.
Whenever you buy something that feels like a waste of money, you learn more about yourself and your ideal spending habits. Figuring out what you value and enjoy spending your money on is a process. Don’t beat yourself up if you don’t enjoy a vacation or concert and feel like you wasted your money. Instead, reflect on what you liked and disliked about the experience and use that data to help you make better spending decisions in the future.
Understand Your Triggers
Understanding the triggers that led you to make the financial mistake will prevent you from repeating it. For me, the fear of missing out led me to spend too much on concert tickets. If I had waited a few more days and thought deeply about whether or not I could afford them, I probably would’ve passed on them. I have some big medical expenses that I should’ve used that money for. But I got caught up in the rush and excitement of trying to score tickets and spent more than planned.
Reflect on your mistake and determine why you overspent or made that bad financial decision. Maybe you bought a stock that wasn’t a good investment because of the hype surrounding it. So going forward, you will try not to pay attention to investing trends and stick with more reliable index funds.
Or maybe you got talked into buying a more expensive car than you budgeted for by a charming salesman. Next time, you’ll walk away and sleep on it so you’re not influenced to make a bad decision. Make a plan for avoiding the mistake in the future so you don’t undo all the hard work you’ve put into recovering financially.
Have you ever made a financial mistake? What did you learn from the experience? Share your thoughts in the comments!
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Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.