USAA Tips: What to do when you realize you made a financial mistake

Content provided courtesy of USAA | By Chad Storlie

There are few feelings worse than when you realize that you made a financial mistake. That sinking feeling is sometimes called buyer’s remorse when you look in the shopping bags the next day and realize the sum of your purchases is larger than how good the clothes make you look, for example.

The truth is, financial mistakes happen to us all. No matter our age, rank, profession, or income tax bracket, we all make a financial mistake from time to time. The difference is how we react, understand, and recover from those financial mistakes.

Here are five steps to follow to help get over a financial mistake instead of ignoring it and hoping the problem will go away:

Acknowledge the Mistake.

The first step in realizing a financial mistake was made is to realize and to admit it. Often times, we can look back and see some early warning signs such as a late payment or willing a paycheck to deposit early. During this step, you need to determine the precise amount of the negative financial effects. The critical part of acknowledging a mistake is so you do not give yourself endless amounts of personal grief for the mistake. When you realize the mistake, then you own the mistake, and make a personal pledge that you will resolve the situation quickly and effectively.

Talk with Your Significant Other.

Once you have acknowledged the mistake, then you need to discuss this with your spouse or significant other. Of all the steps, this one can be the most difficult because no one likes to look foolish or irresponsible in front of the most important person in their life. Openness in financial management is one of the most important of all the financial management tips you will ever learn. By being open, we understand the pressures and then both people will now own the solution.

Get Outside Advice.

Depending on the financial problem, you may have to seek the help of a relative, a friend, or a financial advisor. The outside advice is important because they will provide you with perspective and ideas how to resolve the problem. What appears as an unsolvable problem to you could appear to someone else as perfectly solvable based on his or her knowledge, experience, and contacts.

Determine Options Together to Resolve the Problem.

Once you understand the mistake, have had a discussion with your significant other and talked to a trusted advisor, then you can look at your options to resolve the problem. As a ground rule, stay away from a wait and see or do nothing approach. Determining steps to resolve the issue is critical.

Resolve the Issue and Take Steps to Prevent a Repeat Mistake.

Once you have determined how to resolve the issue then take steps to fix the problem. Fixing the financial mistake will make you feel better and give you a path to go forward. Finally, understand why you made the mistake and what you can do to prevent it in the future. No one makes a financial mistake intentionally, but we may rush a large purchase, not fully factor the debt into our budget or forget about an upcoming payment. Understanding how you made the mistake is critical to preventing it from happening again in the future.

We all make financial mistakes from time to time. By acknowledging the mistake, creating options to resolve the problem, and discussing it we create a path forward and action plan to actually fix the problem.