The Weight of Past Money Mistakes and Their Impact on Financial Well-Being
The guilt of a financial misstep, the shame of a regrettable purchase, or the echo of decisions that seemed right at the time can be almost paralyzing in their discomfort. Memories of these moments often stay with us long after they actually occurred, affecting not just our bank accounts but also our mental and emotional landscapes.
Fortunately, there are a few key steps you can take to address past financial mistakes and transform them into stepping stones towards a brighter future.
Acknowledge. Reflect on the choices that led to financial bumps in the road. Acknowledge the missteps, big or small, and recognize their impact on your overall financial well-being.
Accept. The pain of a financial misstep can actually be a catalyst for personal growth by embracing the potential for newfound financial wisdom. Instead of just bouncing back you can bounce forward—armed with insights that have the potential to reshape your financial future. The sooner you accept the mistakes you’ve made along your financial journey, the sooner you can take actionable steps toward moving onward and upward.
Move forward. Once you’ve gotten realistic about where you are, you can begin the process of embracing a new start with a fresh perspective. In addition to watching your finances rebalance and move in the direction you’d like them to, you’ll be empowering yourself to rewrite your financial narrative while releasing the weight of past missteps.
Acknowledging Your Past Mistakes
The first step to transforming your relationship with money is acknowledging the mistakes you’ve made, particularly the ones that continue to negatively influence how you feel about yourself and your financial situation. Carrying feelings of guilt and shame can be like dragging a giant weight through your life. Releasing them can create space for you to understand that mistakes are part of life, and you’re not alone in navigating these sorts of complications.
Everyone makes financial mistakes at some point in their lives—there’s just no avoiding it. Even people who appear to be “financially successful” have inevitably misstepped in their past.
Consider whether you’re possibly still berating yourself for:
- Not sticking to your budget
- Taking on too much debt
- Making a bad career decision that cost you money and opportunities
- Delaying saving for retirement or other future goals
- Buying a home that was out of your financial reach
Whether your money misstep is big or small, jot it down. Physically writing out what’s bothering you can be a huge help in defining a general sense of unease or financial anxiety. If you have multiple stressors, add them to the mix. Write everything in one place as a kind of financial stress list—but one that is designed to liberate you in the end. Once this is complete, make an effort to understand what led you to each of those decisions.
For example, let’s say you haven’t saved for retirement. Maybe you wanted the extra cash each month or just didn’t want to think about the future. As you’ve gotten a little older, you’ve realized that you’ve missed out on years of investment growth and that it’s time to consider your future self.
Whatever the reason, review these sorts of experiences and recognize why you made the decisions you did. This can allow you to put safeguards in place so similar mistakes don’t happen again. You might decide that getting a financial advisor to act as a sounding board for investment decisions can help create a stable system of checks and balances—especially if you’re prone to making big financial decisions based on how you’re feeling in any particular moment.
Accepting Your Mistakes
Now that you’ve reckoned with the past, it’s time to be kind to yourself. Understand that money journeys are not linear. Recognize the need for self-compassion as you navigate the peaks and valleys of your financial landscape.
And be wary of the saboteur within—self-blame and harsh self-criticism will never be productive. These are roadblocks on your path to financial well-being. They hinder progress and cloud your vision. Commit to silencing that inner critic and replacing it with a compassionate coach.
Look over your list of financial mistakes, and trust that they haven’t completely derailed your financial future. Even big missteps, like a bad investment decision, don’t necessarily have irreversible consequences. Think about what you’ve learned from your experiences, and how you plan to make adjustments in the future. Sometimes the lesson learned is invaluable, especially when you look ahead to your future goals and realize how much more you know now than you did before.
Accepting your past looks like recognizing where you are as a result, embracing the mistakes as part of your journey, and practicing self-compassion. In money—and life—forgiveness is not just for others; ideally it’s a gift you can also give to yourself. Cultivate this as a powerful tool for healing by remembering that you’re not defined by your financial past. You’re simply acknowledging it in order to sculpt a resilient and empowered financial future.
And remember: regret is a heavy burden, but it doesn’t need to be a permanent state. Shift your perspective from dwelling on the past to embracing the future, and use your newfound knowledge as a springboard that is propelling you toward financial transformation.
Moving Forward
With this foundation of self-compassion and lessons learned, let’s talk about mindset—the lens through which you view your financial world. Understanding its power in defining your relationship with money is key, especially as you make your financial decisions moving forward.
Changing Your Mindset
Shift out of stuckness or lack by adopting a growth-oriented, positive mindset. Identify and challenge limiting beliefs that may be holding you back. This mindset shift is not just about money; it’s a life philosophy that can open doors to other possibilities you never imagined.
Take time to unpack any limiting beliefs and negative money narratives connected with your past mistakes. Are they based on facts or fears? Challenge them head-on and replace them with realistic understandings that propel you towards financial success. In many ways, your mindset is the architect of your financial reality.
Setting Goals
A fresh perspective will enable you to start thinking proactively about the future. Setting clear and achievable financial goals will provide a roadmap for your journey, and one that you can ideally get excited about.
Goals not only give you direction but also serve as powerful motivators. They turn abstract desires into tangible targets, fueling your financial change. Whether it’s saving for a dream vacation home, or retiring early, having goals adds purpose to your financial decisions. It can be helpful to start with values-aligned intentions for both your short and long term plans. These might look like:
- Pursuing a career pivot
- Paying off your mortgage
- Having more time and energy in your daily life
- Giving more to the causes you care about
- Protecting your wealth to pass on to future generations
Whatever your goals are, start boldly—there’s always the opportunity to narrow in once you have the big-picture ideas in place.
Making an Actionable Game Plan
Long-term goals can be overwhelming. By breaking them into manageable steps, you’re more likely to stay on track and stay connected to the new financial intentions you set for yourself.
For example, if one of your goals is to pursue a career pivot, you might set a savings goal to give yourself and your family some financial padding to cover the transition, or reduce expenses in other areas of your life.
You might also consider downsizing, or eliminating a car payment by selling yours and purchasing one that’s less expensive. Shifts like these can free up finances and boost savings in both the short and long term. From there, you can automate savings contributions to guarantee you stay on track.
Identifying Roadblocks
If you’re concerned you won’t be able to change your previous habits, think critically about what roadblocks you’re facing on the path to your goals. Let’s take our previous example: you have not invested in your retirement accounts in the past based on in-the-moment emotions, losing the opportunity for growth in your portfolio as a result. You also want to pivot to a different career or industry.
A potential roadblock you may face is the possibility that your career transition will be more tumultuous than you’ve planned for. Put a strategy in place that ensures you have a Plan A, B, and C.
- Plan A: You build up 12 months of cash flow in a “runway” savings account, but your career transition goes smoothly, and you don’t actually need to access the funds.
- Plan B: You need to spend down some of your “runway” savings, but quickly gain traction and are soon able to start contributing to your retirement savings again.
- Plan C: You have several networking colleagues you can reach out to if your career pivot doesn’t go according to plan, allowing you to quickly get back into a full-time job with benefits in your prior field if necessary. You spend down the majority of your 12 months of savings without achieving the pivot, but because of your contacts, you’re able to slide back into your financial plan without much long-term damage done. Now you can create a fresh game plan for pivoting out of your current career again over the next 3-5 years.
Whatever your roadblocks are, putting contingency plans in place to help you navigate smoothly around unexpected or complicated circumstances can give you the peace of mind to pursue your goals confidently.
Celebrate Your Progress
On your financial journey, every step forward is a victory. Take time to recognize and celebrate both small and significant financial achievements. Whether it’s paying off a debt, reaching a savings milestone, or sticking to your budget, these moments deserve acknowledgment.
Meanwhile, celebrating progress is more than just patting yourself on the back; it’s positive reinforcement that fuels your motivation, builds confidence, and sets the stage for continued success. By recognizing your achievements, you’re solidifying the intentional behaviors that lead to financial well-being.
Practice Financial Self Care
People often overlook financial self-care. Beyond spreadsheets and accounts and tracking numbers, this is about nurturing your emotional and mental well-being in the context of money.
Integrate self-care routines into your financial life. This could look like setting aside time to review your budget without judgment, treating yourself when you achieve a financial milestone, or simply acknowledging the progress you’ve made in some other intentional way. Remember, your financial well-being is interconnected with your overall well-being.
Additionally, it’s important to acknowledge that money can stir up a range of emotions. Whether it’s anxiety, excitement, or relief, take time to fully recognize and navigate whatever is coming up. Establishing an easeful relationship with money that nurtures your emotional and mental health can contribute to sound financial decisions well into the future.
A few self care ideas might be:
- Making your favorite meal with your family when a milestone is achieved
- Talking with your financial planner, and celebrating your “wins” by sharing with your spouse or partner
- Setting mini-celebration goals for each milestone you’re working toward – a small trip, a desired purchase, etc.
Seek Support
No money journey is complete without a support network. Embrace the role of friends, family, or accountability groups in your financial transformation. Share your goals, discuss challenges, and draw strength from those who cheer you on. Here are a few ideas to get you started:
Open up. If you’re feeling nervous about reaching out to people, remember that vulnerability is a strength. Open up about past money mistakes with your support network. Seeking guidance and sharing your journey fosters understanding and provides valuable perspectives. You’re not alone, and collective wisdom can be a powerful force.
Find accountability. Accountability is a secret weapon. By sharing your goals and progress, you foster a sense of accountability within your community. Celebrate victories together, learn from setbacks, and bask in the collective encouragement that propels everyone towards financial success.
Seek professional help. Partnering with key professionals can help balance a lot of stress or pressure, and ensure that you move toward your future goals with confidence. A financial planner, tax professional, and even an estate planning attorney can help you successfully realize the progress you’re looking for. To learn more about how the Abacus team can help you transform your relationship with money, book a call with us today.
You hold the potential for a bright financial future, no matter what happened in your past. With a clear plan, a supportive network, and a mindset focused on progress, hope and empowerment, you have the tools to guide yourself through the transformation of your financial journey. The adventure continues, and the destination is one of your own design.
