How to Recover from a Financial Mistake
on Topics: Personal Finance
Over the course of our lives, many of us will likely experience a financial setback due to a mistake. Whether it’s an addiction to credit cards that leads to a five or six-figure debt, poor stock choices, or any number of things, a financial mistake is nothing to be ashamed of. In fact, learning how to deal with financial mistakes can set you up for future financial stability.
Here are three ways to bounce back from a financial mistake and set yourself up for future financial success.
#1: Don’t Bury Your Head in the Sand
The number one step to bouncing back from a financial mistake is acknowledging the mistake. The worst thing you can do is avoid the mistake and pretend it did not happen. Burying your head in the sand is rarely the right approach to take when it comes to finances, especially financial mistakes, which tend to worsen over time if they aren’t addressed. Only once you’ve acknowledged the situation can you begin to fix it.
After you’ve accepted the reality of the situation, forgive yourself for whatever mistake you made that got you into the bind. Remember that everyone makes financial mistakes, so don’t dwell on the past and what you could have or should have done. Just as you wouldn’t harshly judge a loved one who made the same mistake, treat yourself kindly and begin to direct your energy towards fixing the mistake instead of fixating on the past. Once you’re in the right mindset, you’ll be ready to move on to take practical steps to bounce back from your financial mistake.
#2: Devise a Financial Plan – and Follow it
Instead of dwelling on your mistake, direct all of your energy towards coming up with a plan to correct it. With a clear plan in place, you’ll feel empowered to trek the path toward full financial recovery. Even before you fully recover, you will begin to feel better and more confident about your financial situation.
In addition to creating a viable action plan, a key aspect of bouncing back from the financial mistake is actually following through on that plan. Recovering from a substantial financial mistake requires many lifestyle and habit changes, so make sure you are prepared to make those changes. If needed, find an accountability partner to help you on your journey.
For example, if your financial mistake is that you have been working for many years but have never put money into your company’s 401k, even though it is too late to go back and put that past money into your 401k, all is not lost: Instead of wallowing in what could have been or calculating how much money you would have in retirement if you had begun to save at age 25, come up with a plan to save for retirement starting today. Maybe that means adding money to both your 401k and a separate IRA, or starting another savings account dedicated solely to accruing retirement funds. Whatever it is, the plan will help you bounce back and instead of living in the past and your regrets, it will allow you to plan for your future.
#3: Seek Support
Some financial mistakes are easier to correct than others. Depending on the financial impact of the mistake and your comfort level in developing a plan to move forward, you might benefit from outside support. Don’t let your own pride get in the way – everyone needs help once in a while and financial support is available no matter the mistake. The sooner you reach out to help solve your financial problem, the sooner you’ll bounce back.
The first place to reach out for support is within your circle of trusted friends or family members who might be able to lend supportive ears or who are knowledgeable about personal finance. They can help you devise an action plan, check in on you to ensure you are following through with it, or even support you if you get into a financial bind.
Alternatively, you can bounce back from a financial mistake with the support of a professional. A reputable debt relief company can assist you in coming up with a debt repayment plan with your creditors. If you have many outstanding credit card debts, each with high interest rates, consider reaching out to a debt consolidation company that can help you secure a loan to consolidate your debts into one with a lower interest rate.
#4: Learn from Your Mistakes, and Bounce Back
No matter what happened, many financial mistakes are fixable. As long as you face the mistake head-on, create an action plan, and reach out to friends, family, a debt relief company or another type of outside support if you need it, you’ll be well on your way to recovery before you know it.