Last December I was asked to speak to kindergartners through eighth graders about the basics of personal finance. For kids that age, the first thing I like to address is that money management is really just an exercise in decision making, and that the decisions you make with money can be motivated by various triggers. I polled the audience to ask who had ever made a purchase that they had regretted and was really surprised to learn that even at such a young age, nearly every child was able to speak to at least one purchase they regretted.
The same goes for adults. We don’t always make “the right” decisions with our money. Even I have shared my biggest money mistake on this blog, and I think it struck a chord with a lot of readers because it’s something everyone can relate to. Whether your blunder took the form of debt or you just generally didn’t get the value out of a purchase, here are some steps you can take to recover from these mistakes so they don’t follow you into the next phase of your financial life.
Fix What You Can
If your money blunder is still haunting you today in the form of debt, an unused gym membership, a motorcycle, a house, etc., the first step is to salvage the situation as best as you can. Sell that motorcycle, rent your house out, cancel your gym membership. In the case of debt you may need to work with your creditors to negotiate your interest rates or make a debt repayment plan that can help you pay off your debt quicker. The bottom line is that no financial mistake is fatal (not even bankruptcy), so collect yourself and take whatever action you can to correct or limit the hemorrhaging.
Accept What You Can’t Change
That being said, there will often be money blunders that you can’t immediately bounce back from. In these cases it’s important to be able to separate yourself from what happened and focus on what is currently happening. Remind yourself that you can’t change the decisions you made in the past, but the present and future are still here and need your attention. For example, it would be easy to look back at the college you chose and think that you should have chosen a cheaper college to attend, but maybe you met your partner at college, so there were benefits that came out of that experience besides just the cost of your degree. Try to look at the entire picture and accept that you can’t take back the decisions you made, but you can learn from them and use them to make smarter decisions going forward or influence your children to make smarter decisions based on your experiences.
Take Notes and Look Forward
Life is unpredictable, and sometimes the financial choices we make seem like a good idea at the time, but prove otherwise. Recognize every mistake as an opportunity to learn and propel you towards better decisions in the future. Look at your past mistakes as a map of your financial decision making. Can you pick out any patterns that are common among your blunders? For instance, do you spend for the thrill of instant gratification? What would you change if you could do it again? If your regret is a result of spending on physical items, ask yourself if delaying the gratification of buying is something that could help you from overspending in the future?
Overall, keep in mind that every blunder you make with money has value. It may not be monetary in nature, but if you can learn from it in a way that enables you to make better decisions in the future, it can still serve a valuable purpose.
Written By: Lindsay Dell Cook
Lindsay Dell Cook is a CPA, writer, and founder of Budget Babble. She lives in Philadelphia with her uber supportive husband, and enjoys taking their adorable mutt for walks or reading a good book while buried under a pile of cats.