When I first started investing my money, I bought a penny stock (highly speculative investment) and didn't conduct the necessary due diligence (aka research) to really learn about the company and its potential. A well-meaning friend had recommended the stock. Thankfully I only invested a small amount of money, but lost every penny (excuse the pun). It stopped me dead in my tracks. I avoided investing for a short period of time until I regained my confidence. It took a while. I had never experienced a financial loss to this point. It was a powerful learning experience that reframed my approach to investing. I learned that if I don't understand something, I must ask questions. This ultimately led to my investment philosophy, which is "to stick with what I know". And, not to let a set back or mistake hold me back especially when my financial future is at stake.
"Never depend on a single income. Make investments to create a second source." Warren Buffett (1930-) CEO
You are not a failure
All of us have made mistakes with our money at some point or another. We may have been late in paying a bill, overspent on credit cards, or made an unwise investment. It is not the mistake per se, but how you frame it that is essential. Most of us see money mistakes as a failure. And no one wants to feel like a failure around money. If you are harboring any guilt or anguish over bad money decisions, this will keep you stuck living in the past. Coming to terms with your mistakes and reframing them in your mind is key to ensuring that you don't make the same mistake again!
Catherine Comuzzi, Ed.D., a Master Coach and Psychotherapist in private practice in Toronto, specializes in trauma and change. Here's how she describes the complex and conflicting relationship that can develop around money: "Those who defend against and keep at bay feelings of defeat and disappointment can develop a neglect of money issues in an attempt to not have to deal with their emotions."
In other words, looking at past mistakes as failures can create an unhealthy disrespect for money and influence our decision-making process. On a positive note, it is nearly always possible to recover from our past mistakes with money. For women nearing retirement, the window of opportunity is smaller, making it essential to seek expert advice.
All of us have a past. Isn't time you leave it behind?
None of us like to be reminded of past mistakes. Whether it is a failed relationship, job loss, or bad money decision, the emotional pain can last a very long time. In order to leave the past behind, you need to make a conscious choice to live in the present. Your past mistakes should make you aware of what triggers your behavior, and serve as a reminder to make better choices.
Money mistakes don't define you. They can make you savvier.
Money mistakes are like failed relationships. We move on, but we never really let go. The pain goes away but the feelings and emotions continually rise up from our subconscious. Taking control of your thoughts and how you have internalized or view your past money mistakes is a surefire way not to repeat them again. By raising your consciousness about past money habits, and acknowledging your mistakes, you can forge a new future for yourself.
Stop living in the past and look to the future
When you reframe money mistakes from failures into learning events, they become a powerful currency to drive change in your life. Being more present and mindful with your thoughts around money is empowering. Should you ever be in doubt, always seek advice from a financial expert. As I learned the hard way, the best decision is an informed one.
A fresh approach to money management
Author of The Savvy Money Gal: 6 Savvy Money Strategies for Successful Women