Five Things to do When You Make a Financial Mistake

imageHave you ever made a financial mistake?  I sure have, and I won’t forget anytime soon.

My mistake centered around a con artist (okay that probably is a bit strong, but that is the way I felt after it was over) disguised as a decorator. After it was all said and done, I wanted to cry. I ended up with decorations that did not look like anything I wanted to live with.

This is an easy reminder of my error because I see it daily. What about your financial mistake?  Was it a bad stock or investment?  A once in a lifetime opportunity turned tragedy?  Was it a poorly thought out business?

So what do we do once we have financially fallen?

  1.  Analyze what lead you to making the mistake. For me, I had a lot of emotion tied up in redecorating my home. My decorator ripped the band aid. She also took a pretty good chunk of my savings with her when she removed the band aid.  My vulnerability came because I was morning the loss of my parents, trying to sort through their belongings, and overwhelmed with emotions when thinking of getting rid of anything that was theirs.  Why did you decide to do what you did that turned out bad?  Was it peer pressure (all my other friends bought a Jeep)?  Or sales pressure (the financial planner told me that it was a good investment)?
  2. Learn from your mistake. In my situation, I learned that I would have been better served to get a friend to help me sort through things.  After getting rid of what I did not need or want, I should have made a storage and/or decorating plan, and then worked the plan.  The funny thing is that I love to decorate homes, and I think I am pretty good at it.  I will never pay anyone to get to have all that fun again! What did you learn from your financial loss?  What weakness in yourself made you vulnerable to the bad decision?  Did you do your home work (estimate costs, research online, come up with a worse case scenario)?
  3. Vow not to make the mistake again.  Now that you have learned your lesson, you have to make sure you do not do this again.  Sometimes what seems like the easy way out or good deal, may end up being a nightmare.  Make sure you recognize the pattern and do not repeat the error.  Before you make any costly decisions in the future, determine if the risk is worth the opportunity?  Are you willing to work extra years, take a second job, or, in my case, forego redecorating for the rest of my life?
  4. Stop beating yourself up.  The damage is done.  Instead of fretting, crying or giving up, put it in perspective.  You may have done yourself some financial harm, but as long as you are willing to work to overcome the loss, you can recover.
  5. Move on and plan for a better outcome next time.  Have you ever heard the phrase, “cut your losses?”  You can’t undo the damage, but you can mitigate the situation by not wasting anymore energy on it.  If your problem is peer pressure or sales pressure, maybe your should impose a 48 hour cooling off period in the future.  Wait 48 hours before you agree to buy or invest in any big picture deals.

Though we we work hard for our money and we don’t want to throw it away, I would rather loose my own money than to let the stock market, a financial planner, or a roll of dice lose it for me. Mistakes happen so move on. Keep your chin up, your pocketbook in hand, and research, research, research!  Just don’t make the same mistake twice!