Recovering from Small Financial Mistakes
The title says “recovering” because you may beat yourself up more for small mistakes than big ones. Like many items, financial mistakes come in all sizes. Small financial mistakes may include an unsatisfying steak dinner or a hastily chosen Amazon purchase. You just learn from these and move ahead.
As a rule, awareness of financial mistakes is the important point. Simple self-reflection is a valuable tool for preventing the more harmful patterns of behavior that sabotage your long-term financial goals.
Big financial mistakes are a whole separate topic—so we will save that for another day. For purposes of this discussion, think in terms of anything that cost no more than one-half of your monthly income. Here are examples:
- A computer or electronic device that you now dislike
- Power tools you never really use (or may not feel safe using)
- A recently purchased sofa that is not the right color
- A moderately expensive toy for your child that they “had to have”, but doesn’t play with
- Expensive golf clubs, which seemed like a good idea when you thought you wanted to learn to play golf
The list of examples could be endless. The problem is that most people don’t ponder their little financial mistakes. For physically small items, you may just stick them in your garage and move on. For bulky items, like a bad furniture purchase, you may try to ignore it. However, like a sliver of wood stuck in your toe, it bothers you every time you look at that sofa.
Sometimes you can fight the battle and get your money back, but for most people, that makes a bad experience even worse. You may think, “Do I really want to stand in line at Home Depot to return a $2 light bulb?” or “Do I want to complain about an overcooked meal?” For most people, the answer is “NO WAY!”
In all financial decisions, becoming conscious of your behavior is your most valuable tool for preventing future financial mistakes. This is one reason why tracking expenses is important. People who track expenses can see their patterns of behavior and take corrective action. You may remember the old Benjamin Franklin adage “Beware of little expenses: A small leak will sink a big ship.”
Take a few minutes and reflect on your last small financial mistake. Then plan for what to do the next time when similar circumstances arise (and they will.)
The Solution: Enjoy a Guilt-Free Weekend
Declare this weekend to be a guilt-free weekend where you will clean out the freezer, throw out old food items that have freezer burn, take the things you have stuffed in closets or the garage to a donation center.
As part of this guilt-free weekend:
- Acknowledge that you will likely make small mistakes in the future, and simply do your best to minimize them.
- Vow that the next time you decide to take up archery, woodworking, or some other activity, you will rent before buying.
- Make sure you enjoy an activity or will really use it, before buying.
- Promise yourself that you will return it if it doesn’t work out.
- Commit to doing the best you can and be encouraged by another adage from Benjamín Franklin: “An ounce of prevention is worth a pound of cure.”
Enjoy your guilt-free weekend!
Kristina Bolhouse CPA/PFS, CFP®
© 2021 The Arkansas Financial Group, Inc., All rights reserved.
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