Yahoo Movies 10 Tips for Dealing With Your Financial Regrets
We have all made financial mistakes; that is just human nature. The problem? Financial mistakes become financial regrets, and focusing on the regrets too much can make it tough to make improvements.
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Thus, we have put together a list of the best 10 tips to deal with your financial regrets. These tips will help you to not only move on but also be sure to avoid making the same mistakes again.
1. Identify the Source of the Regret
Oftentimes, the first step toward solving a problem is to identify the root cause. Such can be the case with financial regrets, too. For example, if you suddenly find you are having trouble making ends meet, a budget can help you find sources of increased spending.
"We all have financial regrets and taking the time to dive in to the why and how of what makes you feel this regret can ensure it doesn't happen again in the future," says Andrea Woroch, consumer and money saving expert at AndreaWoroch.com. "This also allows you to make a plan for how to avoid any mistakes that lead to your financial regret and create habits that promote financial happiness instead."
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2. Don't Ignore It
If you have financial regrets, addressing the underlying problem may not seem easy, but ignoring it can make things worse. Michaela McDonald, manager of financial planning at Citrin Cooperman, agrees. "A surefire way to make a financial problem worse is to turn a blind eye. Endure the uncomfortableness and spring into action. The faster you have a plan, the easier it will be to move on."
Facing our problems head-on isn't always enjoyable, but it is likely much better than the alternative.
3. Tell Someone
We all process financial regrets differently, and talking about money is sometimes seen as taboo. Still, McDonald recommends telling someone about it.
"Humans have blind spots, that's how mistakes happen in the first place. Financial blind spots can end up costing you and may deter your future plans. Consulting a financial professional could help right a financial wrong and build a plan to recover."
Although it can be tempting to keep things to yourself, telling someone can help you set a plan in place.
4. Keep Things in Perspective
Hindsight is 20/20, as they say. But this expression overlays a reality we all face: things aren't always so obvious when we're facing a financial challenge that is new to us.
"First, remember that you were doing so with the best information you had at the time when you made those decisions and choices," says Leslie Tayne of Tayne Law Group. "For this reason, it's crucial to keep in mind that even though the circumstances you presently find yourself in aren't great and possibly could've been avoided, you didn't have the knowledge you do now. If you did have prior knowledge of the outcome, you would've chosen differently."
5. Do the Best You Can
When it comes to your finances, focus on doing the best you can given your situation. Remember: those around you may have different circumstances, so it may not be fair to compare yourself to them.
"If you're careful about your finances, sticking to a budget and making a point to pay down debt and save for the future, you're doing everything that you can do, and what you're doing is enough to get you to a better financial situation," says Tayne. "Treat yourself kindly and practice self-care. If a friend were in a similar situation, you'd likely offer support, guidance and advice to improve their situation. Be that same good friend to yourself when you're dealing with financial regrets."
6. Focus On the Future
While we can't change past mistakes, we can learn from them and make better decisions going forward. And although we may make some mistakes here and there, it doesn't mean we can never achieve our financial goals. Leslie Tayne gave her input on this point.
"No matter how bad your financial circumstances are or how bad the situation feels, it doesn't mean that achieving financial security in the long term is impossible. Put your energy into the future and your financial goals instead of stressing about things you did in the past that are hurting you now."
7. Set Achievable Financial Goals
When setting financial goals for yourself, it's a good idea to make them ambitious -- but not so ambitious that you can't achieve them.
"To deal with and recover from financial regrets, set a new goal that is doable and achievable," said Ilian Georgiev, former CEO and co-founder at Charlie, now owned by Chime. "Break down the big goal into some small steps and see yourself hitting them regularly. A good way to avoid financial regrets is to set up an automatic transfer whenever you get any income -- you can move a few extra dollars over to savings and see how much money accumulates over time."
8. Remember That Setbacks Happen
Once you have a financial plan in place, you might be tempted to think everything should go smoothly. But that isn't always the case. Perhaps there is a prolonged economic downturn such as we saw with COVID-19, or perhaps something happening in your own life. Whatever the case may be, going astray can lead to financial regret.
"Understand that a financial plan is not linear. Setbacks are part of the journey," said Ryan Jewell, managing director of Pacific Advisors. Setting realistic expectations will help you avoid feeling guilty when things do not go exactly according to plan.
9. Create a Solid Retirement Plan
Retirement planning can be a challenge, especially since we don't necessarily know what our retirement income or tax brackets will be. Bradley Crockett, senior vice president and head of financial services at Wilmington Trust, says that although tax-deferred growth can provide a significant advantage, a rise in future tax rates can reduce this benefit.
"Those who are relying on these accounts to fund retirement may benefit from diversifying the location of their retirement savings. Converting a portion of tax-deferred assets to a Roth IRA may be a strategy to consider should income tax rates increase."
10. Choose an Investing Strategy -- and Stick To It
Have you ever wished you had invested sooner? Maybe you have regretted not investing during the early days of Google when its share price was around $50. That means that a $10,000 investment would have grown to over $400,000 today. On the other hand, investing in index funds is a dependable way to build wealth. Michael Cocco of Equitable Advisors agrees.
"Over time, the market makes new highs, but we just don't know when and how that will occur. If someone has a long-term time horizon, I tell them at the very least to dollar cost average and commit to investing a certain amount per month, no matter what, to take the emotion out of investing."
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