How Financial Mistakes Can Lead to Future Success
Sometimes I feel like we are scared of a good fight. I’m not talking about fisticuffs. I’m talking about the everyday struggle that we all have.
I’ve learned that when you start a business, there are days when you wonder why you didn’t start earlier and there are days you wonder if you’ve made a mistake. I’ve been fortunate that most days are positive, but I’ve also learned that there is value in the days of struggle. It might not feel like it when it’s happening, but learning to embrace the days when things aren’t going well is an important part of becoming a better person.
When creating your financial plan, you’re bound to realize you’ve made a few missteps along the way. When you make a mistake, instead of letting it affect the future of your financial plan, think about how you can do better next time. How can you change the way you do things, so you don’t make that mistake again? I’ve always believed that mistakes are free lessons on how to improve. When it comes to creating your financial plan, it’s not your ability to avoid mistakes that is going to make you successful; it’s your ability to learn from them. (For related reading, see: The Way You Think About Money and Your Finances.)
Financial Planning Is Not Always About the Numbers
You can’t have a financial plan without numbers, but you are able to choose how important those numbers are to you. When we become too fixated on the numbers, we forget the reason for having a financial plan. When you make financial decisions based only on the numbers instead of the outcome you wish to accomplish, you open yourself up to mistakes.
Here are some questions to ask yourself when making financial decisions:
- Is this something that is an important part of who I am and who I want to be?
- Will using these resources provide me with greater satisfaction and happiness in the long run?
- Will this decision get me closer to what I value most in life?
By asking yourself these questions, not only will you learn from your previous mistakes but you will avoid making those mistakes again.
When I first started my career as a financial advisor in 2006, I had to pay to get my securities licenses. I gladly maxed out my credit cards to do so. I didn’t think about what that meant for the future, or if this was something that I wanted to do long term. I just wanted to be able to say that the four years I spent getting my education at Northern Michigan University meant something. That I had a real job and the success that came with it.
What I soon realized was that short-term thinking caused me a lot of long-term suffering. It took me over a year to pay off those bills, and there were times when they weren’t getting paid at all. It was a mistake that I vowed not to make again, but it was also a mistake that I wouldn’t erase.
Learning Financial Mistakes the Hard Way
Sometimes we make the same mistakes over and over again. It’s not that we don’t know that we shouldn’t make those mistakes, it’s that we haven’t learned a better way.
No one enjoys budgeting, saving money, or controlling spending. Some of us do it out of obligation and some of us don’t do it at all. To understand our feelings towards money, we need to look back to when we first learned about money. By understanding how we developed our feelings about money, we can begin to learn from our mistakes. (For related reading, see: The 3 Most Important Tips for Your Financial Plan.)
Here are some questions to help you understand your earliest feelings about money:
- What is your first memory of money?
- What money lessons did you learn from you father?
- What money lessons did you learn from your mother?
The things we learned about money from a young age often lead us into making mistakes as adults. By understanding why you make mistakes, you can start to learn the valuable lessons to move forward.
Mistakes as Part of a Brighter Financial Future
When it comes to changing your money habits, I am a big fan of goal setting. We need a deep understanding of your values and experiences to start building your financial plan. By setting goals tied to what you value most in life, you give yourself the ability to learn from your mistakes. It also becomes easier to make the changes necessary to achieve those goals.
Having more money doesn’t solve most problems. It’s what you do with the resources you have that leads to a rich and fulfilling life. By viewing your mistakes as learning experiences to create a better life, you better your chances of accomplishing the goals you have set. (For related reading, see: Make Better Financial Decisions With These 3 Tips.)