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Money Mistakes

Last time I talked about the 4 steps to spring clean some of your mental money clutter. One of those steps is to forgive yourself and your spouse, if you have one, for past money mistakes. I also encouraged you to let go of the tendril of regret that accompanies mistakes. Easier said than done, right? Oh, my, regret has long, sticky tendrils that make detaching so tricky. Over the next couple of weeks, I want to talk about money mistakes, how to avoid them, and how to get beyond them when they (inevitably) happen.

Mistakes are a topic that I am an expert in! I have made loads of money mistakes and still have to regroup after I screw up and then think, “Why did I do that? I know better.” Try, try again.

So first – let’s define a money mistake as a money decision that is causing you regret. There can be other money mistakes – subtracting wrong in your checkbook, etc. that are technically not correct but are easily fixed and you move on quickly. For those other mistakes that cause you to cringe when you think of them, let’s exorcise the ghosts of mistakes past with this quick exercise (best done with a pencil and paper but even mentally is better than nothing):

  • What happened?
  • Why do you think that happened? (Here are a few ideas but definitely add your own: not paying attention closely, acting emotionally, ignored good advice, over-rode your own instincts, did not take action when you should have, did not face the truth of the situation)
  • What did you learn as a result of the mistake?
  • As you think back on mistakes you have made in the past, are they more likely due to taking a wrong action or due to inaction?

A mistake does not ever have to stay a mistake if you learn something from it – then it’s just tuition paid! As you think about your mistakes and what you can learn, pay very close attention to that last question. If you can group your past mistakes by “wrong action” and “inaction” what does that tell you? By honing in on your area of weakness or regret, you can better understand where you need to focus going forward so that you can avoid adding to the mistake list.

I will go into the two types of mistakes more deeply next week but during the week consider other areas of your life where you have made mistakes – is it from acting quickly or impulsively or is it from burying your head in the sand? You may see some patterns in other areas of your life. You are not necessarily all in one camp or the other so don’t feel that must pick one or the other but do see what patterns you can find. It is a thought-provoking question, though, so as you move through your week, give it some thought and let some of those past mistakes help guide you to a better financial future.

To your financial success!