How to Make the Most of Your Money Mistakes

February 21, 2017

How to Make the Most of Your Money Mistakes

“Our greatest glory is not in never failing, but in rising up every time we fail.” – Ralph Waldo Emerson

Have you ever made a money mistake? Maybe you make small everyday mistakes of the library fine variety (guilty), or perhaps you’ve made more impactful mistakes like taking on too much debt (guilty again).

If you’ve made a money mistake, congrats, you are human. No one is born knowing how to manage money responsibly. Even if you were fortunate enough to be taught how to handle money or healthy money habits were modeled for you growing up, that does not automatically guarantee you will never make a mistake. No one is immune to mistakes — of any kind. That’s one thing we all have in common.

What we don’t have in common, though, is how we react to our mistakes. Some of us allow our money mistakes to cripple us — to discourage us from trying again and to convince us to give up. We begin to believe the mistakes mean we’re “just not good with money,” and we move forward based on that belief.

Some of us use mistakes as fuel, as second chances, as reminders of how NOT to do things when we try them a second (or a third) time. We see mistakes as opportunities to begin again — but with more information and wisdom.

So the question is which path do you take when you make a mistake? I have made plenty significant money mistakes, from overloading myself with too much consumer debt to purchasing a home I couldn’t afford, to changing careers without preparing myself financially. I don’t enjoy the fact that I made the mistakes, but I am grateful for the invaluable lessons those money mistakes taught me. I continue to benefit from the lessons I learned as do others with whom I share them.

For each mistake I’ve made, I’ve noticed I must go through a process to truly glean the lesson. Here is how you can make the most of your money mistakes.

Accept Responsibility

This is by far the most important step towards making sure the mistakes you make are not made in vain. If you have kids, you may very well know their first instinct when confronted with a mistake they made is to blame someone else: the dog, their sibling — even you! A natural response is sometimes, “Well, you…” When this happens in my family, I gently point out that there is no u in responsibility, but there are three i’s. Get it? (Feel free to borrow that one.)

The point is if you’re busy pointing fingers and blaming circumstances, conditions, the weather, etc., then the road to learning from your mistake will be a long and bumpy one. Sure there may have been circumstances beyond your control or the actions of others that contributed to your money mistakes, but you need to give thought to the role you played.

What warning signs, misgivings, or advice did you choose to ignore? Did your impulsivity or immaturity lead to your mistake? How about a lack of preparation or knowledge? Only when you have recognized what actions of yours contributed to your mistake, can you clearly see the lesson. Evaluate what you did that you shouldn’t have, what you didn’t do that you should have, and accept your responsibility.

See the Positive in Your Mistakes

Once you’ve taken full responsibility, you can begin to see your mistakes in a new light. No one likes making mistakes, and it’s not easy to admit them, but being embarrassed or feeling shameful about your mistakes allows them to have power over you still — long after they’ve been made.

Reflect back on your mistake and see what good came from making it. This, of course, is easier said than done and depending on the nature of the mistake and the extent of its impact, it might take a little time for you to see the silver lining. But it’s there, and once the dust has settled, you will be able to see it.

Break through the disappointment by seeing the good that came from your failure. Did this mistake prevent you from making an even bigger one? Did it force you to admit or face something you otherwise wouldn’t? Did it wake you up to something you had been ignoring? Every negative situation has a positive aspect to it. Find the positive in your money mistake and embrace it.

Begin Again (This Time with a Plan)

The best part of making a mistake, in my opinion, is beginning again. You get to start again with fresh eyes on the situation — but this time make sure you have a plan.

Go back to what you learned from taking responsibility for your mistake, and devise a plan for the next time you will attempt to achieve whatever it is you failed at. If you saddled yourself with too much debt, had a failed business, bought too much house, etc., determine to do things differently.

If you need more or new knowledge, go after that. If you discovered that you should have taken an entirely different path towards your goal, then pursue the different path. Be sure not to move forward unprepared or ill-equipped, as that is what led you to the mistakes in the first place. Device a specific plan to achieve your goal the “right way.” Be firm with your plan — do not sway.

Share Your Mistakes with Others

Okay, maybe this is the best part of making mistakes — the lessons you learn from them stretch far past your benefit. Once you’ve owned your mistakes, you can share your knowledge with others.

We are quick to share our successes. I believe the same should be true for our failures. Both present learning opportunities for others. If the path you took can serve as a warning sign for others or as a “how not to” do things, then, by all means, share it.

Don’t underestimate the power of sharing your story with others. It just might prevent someone from making the exact mistake you did.

Prevention is Better Than Cure

This process — accepting responsibility, finding the positive, beginning again, and sharing your mistakes with others — will not only help you make the most of the money mistakes you’ve already made, but it will also help to ward off future mistakes.

Now that’s not to say you will never make another money mistake in your life, but going through these steps will make you more aware and intentional about your money moves and will prevent you from making similar mistakes.

And we all know, prevention is better than cure!

Have you made money mistakes? (Of course, you have!) How have you learned from them?