Recover From Your Money Mistakes in 6 Simple Steps

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We've all made mistakes with money, and some of us have made very big ones. It can be hard to get back on your feet when you've experienced a financial setback of your own making.

But if you can view your screw-up with the right perspective and learn from it, you can emerge stronger and better-prepared for a healthy relationship with your money. Here's how:

1. Admit You Goofed

Mistakes only become failures if you don't learn anything from them. And the first step to learning is to admit that you goofed.

Don't think of it as a failure or interpret it to mean that you're a bad person. Think of it as a minor setback or a lesson. Your mistake may even teach you something valuable about yourself that you never realized before.

2. Identify What Went Wrong

Step back and identify what went wrong, so that you might avoid making that same mistake over again.

If you made a bad investment, what drove you to do so? Were you listening to bad advice? If so, you may want to reconsider your financial advisers. You may choose to educate yourself more instead of being swayed by trends.

If you took on debt to fund a lifestyle you couldn't afford, what drove you to do that? Are you secretly unhappy at your job and looking for a way to distract yourself? Do you rely on shopping sprees to make yourself feel better at the end of a bad day?

3. Stop Blaming Yourself

There's a difference between taking responsibility for your actions and dwelling them on.

We often tend to equate our bad choices with our being a bad person: "I made that bad investment because I'm an idiot," or "I got into debt because I'm irresponsible." You need to let go of these negative self-narratives and start thinking of yourself as a good person who has slipped up.

Why does this matter? Because calling yourself names only traps you in a negative cycle. It prevents you from believing you have the ability to do better, and it can often become a self-fulfilling prophecy that causes us to make the same mistakes all over again. Your bad decisions don't have to define who you are as a person.

4. Start Looking Forward

It's not enough to simply vow to "do better" in the future. Developing concrete goals and actionable steps will set you up for success and give you a task that you can start doing now to improve your situation and take your mind off the past.

Yes, you need to spend time reflecting on what you've done wrong to learn from it, but at a certain point, you need to stop look backward and start looking forward. Begin by identifying a major long-term goal, such as repaying your debt.

5. Make One Small, Immediate Change

Pick a small, immediate action step that can move you toward your long-term goal. For example, if you want to pay down debt, you can immediately cut your cable TV subscription so you can put more toward your credit cards. If your long-term goal is saving more for your retirement, the immediate step could be setting up an appointment with a financial adviser.

Keep repeating this step. Major changes occur one small step at a time.

6. Accept Yourself

Be honest with yourself about the mindsets and assumptions that drove you to make your bad decisions. Then find small ways to change those attitudes and habits.

Mistakes will happen. It's how you move on from those mistakes that defines your financial health in the long-term.

Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 30 countries, owns six rental units and runs a business from her laptop. Her blog, Afford Anything, is a gathering spot for rebels who refuse to say, "I can't afford it." Visit Afford Anything to learn how to shatter limits and live life on your own terms.


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alfredschrader

The best way to fix a money mistake is don't make it in the first place. Wisdom will go a long way to prevent money mistakes, and the best source for this is Proverbs in the good book.

August 03 2014 at 5:30 AM Report abuse rate up rate down Reply
weilunion

Funny how all the pictures for this decrepit site are of white families or white people. that is because that is who it is written for.

Now the six step program. What a joke and the real sad part is that people believe it like they do Suzi Orman or their tent preachers

August 02 2014 at 6:56 PM Report abuse +1 rate up rate down Reply
1 reply to weilunion's comment
gfy.gfy

No one is forcing you to read, log in and comment. WTF is your problem?

August 02 2014 at 11:38 PM Report abuse rate up rate down Reply
crimeslawyer

Then curl up in a warm blanket and call your mother.

August 01 2014 at 2:34 PM Report abuse -2 rate up rate down Reply
1 reply to crimeslawyer's comment
weilunion

Right, if she is not on the street due to no savings and no job. but people did not like your post. they actually believe in and embrace their servitude

August 02 2014 at 6:57 PM Report abuse -1 rate up rate down Reply