How to recover from bad financial decisions (2024)

How to recover from bad financial decisions (1)

Lifestyle

Everyone’s made financial decisions they regret, whether it’s buying something you know you can’t really afford, living on credit or not saving for retirement. Regardless of how big or small your financial misstep, there’s always room for improvement when it comes to money.

While you can’t change the past, here are ways to help you bounce back or avoid them in the future, with practical steps that can help you recover financially.

  1. Acknowledge the decision and move on
    Financial failures and mistakes not only hurt your bank balance, but they can influence your confidence. However, you don’t have to beat yourself up about it; even the world’s wealthiest have made the same mistakes you have.

    Recognising that you made a wrong decision and then committing to making it right or changing it are what will help move you forward. If you don’t admit that something went wrong, you can’t do better next time.

  2. Know (the full extent of) the damage
    So, you’ve made a bad investment, skipped a payment, damaged your credit. To fix the situation, you need to know the full impact and consequences of it. This involves taking a deep dive into your finances so you can see exactly where you need to make the change and what you’ll need to do it.
  3. Change your mindset to change your situation
    You can start changing your financial situation today. There’s never going to be a perfect time, so why wait? It’s also important to put an actionable and measurable financial plan in place because things don’t change themselves. If you want to revamp your finances, you need to take responsibility and start working on it. This includes the following:
    1. Reassessing your financial goals
    2. Deciding what you need to prioritise to either get you out of the situation or move you forward
    3. Asking yourself whether you can do this or if you just need professional help
  4. Find out what your options are
    Depending on how severe the impact of your mistake is, there are various steps to take to correct the error or improve your situation, but don’t be tempted by quick fixes. Get the right advice and guidance from reputable professionals.
  5. Take action and stay committed
    Once you’ve got a plan, start implementing it, but be patient and remain disciplined on your journey as it might take some time to turn around.

    Here are some actionable steps to recover from some common financial mistakes*:

Accumulating debt from spending too much

Living beyond your means

  • Relook your budget
  • Prioritise your spending
  • Only buy with money you have; stop using credit for a while
  • Consider cancelling some of your monthly subscription services
  • Establish a debt repayment plan

Not having an emergency fund

  • Include savings as a category in your budget
  • Open a savings account and start with small, regular contributions
  • Automate your savings

Falling behind on retirement savings

Not keeping track of your money

  • Download our Banking App and use our add-ons to maintain, manage and move your money efficiently and effectively

*This information does not constitute financial, investment, tax, legal or other advice. Before making any decision or taking any action regarding your finances, speak to a qualified financial advisor.

How to recover from bad financial decisions (2024)

FAQs

How do you recover from bad financial decisions? ›

Living beyond your means
  1. Relook your budget.
  2. Prioritise your spending.
  3. Only buy with money you have; stop using credit for a while.
  4. Consider cancelling some of your monthly subscription services.
  5. Establish a debt repayment plan.

How to forgive yourself for bad financial decisions? ›

Here are 5 steps to help you move forward after a financial mistake and love yourself again:
  1. Step 1: Acknowledge the mistake. In order to move on, you need to accept and acknowledge whatever financial mistake you have made. ...
  2. Step 2: Talk about it. ...
  3. Step 3: Focus on the present. ...
  4. Step 4: Don't stop learning. ...
  5. Step 5: Let go.

How do you accept a bad financial decision? ›

Even if you've made one of the worst money mistakes, a smart first step is to simply acknowledge your misstep, take a step back, and at first do nothing. A rash attempt to fix a problem can actually make it worse. Once you've accepted and assessed the damage, you can put a recovery plan into action.

How do you recover from a massive financial loss? ›

5 steps to help you recover from a financial setback
  1. You can succeed. Accept the reality of your challenge and handle it quickly and aggressively. ...
  2. Know your financial resources. ...
  3. Set up a budget and prioritize expenses. ...
  4. Take action now. ...
  5. Seek out professional help.

How do I get myself out of financial ruins? ›

How to get through a personal financial crisis
  1. Minimize the damage. ...
  2. Document the damage. ...
  3. Cut back on expenses. ...
  4. Use other people's money before your own. ...
  5. Assess your savings. ...
  6. Examine your bills closely. ...
  7. Develop a new budget that focuses on financial recovery. ...
  8. What caused the biggest financial impact?
Sep 14, 2023

How do you fix financial trauma? ›

Overcoming & Healing from Money Trauma – 7 Steps
  1. Step 1: Be Willing. ...
  2. Step 2: Talk to Someone You Trust. ...
  3. Step 3: Find Community Support. ...
  4. Step 4: Consider Therapy & Self-Healing. ...
  5. Step 5: Hire a Coach. ...
  6. Step 6: Love & Care For Yourself. ...
  7. Step 7: Start Small With the Money Stuff.

How to release financial shame? ›

Therefore, to move forward and overcome it, you can find ways to cope, so it lessens over time.
  1. Try to acknowledge and name what you are feeling. ...
  2. Shame can create a complex cycle. ...
  3. Give yourself time and grace to overcome money shame. ...
  4. Find opportunities to talk to others about money to help reduce feelings of isolation.
Feb 8, 2022

What's your biggest financial regret? ›

Not saving for retirement early enough has been the No. 1 regret among Americans for six out of the seven years Bankrate has asked about financial regrets. The one exception is in 2021, when not saving enough for emergency expenses was the No. 1 regret.

How to move past financial mistakes? ›

7 Tips to Bounce Back from Financial Mistakes
  1. Don't Dwell on It. ...
  2. Take Stock of Your Situation. ...
  3. Get Back to Basics. ...
  4. Freeze Your Spending. ...
  5. Don't Be Tempted by Quick Fixes. ...
  6. Take Care of Your Health. ...
  7. Start Preparing for Emergencies.

How do you bounce back from a bad decision? ›

Discover five actions to take after you've made a bad decision.
  1. Forgive yourself. ...
  2. Determine how you can move forward and take action. ...
  3. Evaluate what happened. ...
  4. Consider how to improve your decision making next time. ...
  5. Try using a decision-making process.

How to let go of losing money? ›

Surviving . . .
  1. Acceptance. Accept the fact that this loss has really happened to you. ...
  2. Build and use your support system. Find people you trust: friends, family, spiritual leaders. ...
  3. Get a different perspective. Put the brakes on rumination. ...
  4. See what you can learn. There's a lesson in everything. ...
  5. Find the gifts.

How to get over a costly mistake? ›

Here's your seven-step recovery plan.
  1. Step 1: Allow Yourself to Feel Awful About it (But Not for Too Long) ...
  2. Step 2: Keep Things in Perspective. ...
  3. Step 3: Confront Your Worst-Case Scenario—Then Let it Go. ...
  4. Step 4: Apologize if You Need to—But Don't Overdo It. ...
  5. Step 5: Create a Game Plan for Next Time.

How to bounce back from financial ruin? ›

7 Steps to Break Out of a Financial Crisis
  1. Analyze your spending habits to find expenses to trim down.
  2. Build up an emergency fund to cover unexpected expenses.
  3. Liquidate assets you don't need to pay down debt (and boost your savings)
  4. Set a realistic debt pay off date to keep you motivated and on track.

How do you get out of a deep financial crisis? ›

  1. Maximize Your Liquid Savings.
  2. Make a Budget.
  3. Minimize Your Monthly Bills.
  4. Closely Manage Your Bills.
  5. Maximize Non-Cash Assets Value.
  6. Pay Down Credit Card Debt.
  7. Get a Better Credit Card Deal.
  8. Earn Extra Cash.

How do you rebuild wealth after losing everything? ›

Grew Up Rich and Lost It All? Here's How To Rebuild Your Wealth
  1. Step 1: Assess and Accept Your Situation. ...
  2. Step 2: Create a Detailed Recovery Plan. ...
  3. Step 3: Rebuild Your Income Streams. ...
  4. Step 4: Begin Saving and Investing Wisely.
Jun 29, 2024

How do you overcome financial guilt? ›

Stress testing your financial plan and getting a second opinion from a financial professional can help mitigate fears of exhausting your nest egg. If you are confident in the security of your own financial plan, how much you spend for the rest of your life is up to you—including how much you spend on yourself.

How to recover from financial crisis? ›

6 Steps To Recover From Financial Disaster
  1. 6 Well-Proven Steps That Guarantee Financial Recovery.
  2. Step 1 – Accept Your Situation. ...
  3. Step 2 – Take Inventory. ...
  4. Step 3 – Define Your Goal. ...
  5. Step 4 – Develop Your Plan. ...
  6. Step 5 – Take Action. ...
  7. Step 6 – Correct And Adjust.

How do you overcome financial distress? ›

How We Make Money
  1. Prioritize what you can control on discretionary spending.
  2. Find ways to earn more money.
  3. Pay essential bills.
  4. Save money during trying times.
  5. Track your money-saving progress.
  6. Talk to your lenders.
  7. Consult with an expert financial advisor.
May 21, 2024

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