No matter how smart or capable you are, there’s one thing that you’ll never be able to pull off and that’s reverse time. You see, once you make a bad financial decision, you won’t be able to revert it. Nonetheless, what you do after it might make a difference in determining and controlling the potential damage. With that in mind and without further ado, there are several tips for getting the most out of your previously bad financial decisions.
Overcome psychological barriers
First of all, you need to realize the fact that what’s done is done and there’s nothing you can do about it. So, stop beating yourself over it. Sure, feeling some degree of regret is both normal and natural but you can’t allow this to take too much of your time or effort. Second, some people experience fear when it comes to the idea of future financial decisions. Think about it, for every bad financial choice you’ve made, there were also some good ones. Don’t let one mistake determine the future course of your financial planning or become too timid to take calculated risks. Most importantly, try to figure out exactly what you’ve learned from your mistakes. This will give you the confidence to move on.
Buying a new vehicle instead of used
This particular idea is not necessarily bad, even though it’s mostly meant for people who can afford this luxury without having to lose sleep over it. Even though some people may not see it this way, luxury is exactly what it is, seeing as how the vehicle loses a fair chunk of its original value as soon as it leaves the dealership. This means that you can get a vehicle that is all but new for a significant discount. Another problem that you’ll encounter here is the fact that once you choose to sell the vehicle in order to get something else, you won’t get a price that’s nearly as good as what you’ve originally paid. Still, seeing as how you’ll own more than one vehicle in your lifetime, this is a mistake that you’ll soon get an opportunity to rectify.
Don’t be afraid of loans
Loans are a very polarizing concept, seeing as how some people are completely reckless and will over indebt themselves in a minute, while others will do anything it takes to avoid applying for a loan. Truth be told, a loan is merely a tool, which means that its effectiveness depends only on what you’re using it for. A great business opportunity is definitely worth getting a loan, while in some scenarios where you’re struggling with cash flow, looking for quick loans online could be the best solution.
The reason why some loans have a bad name is due to the fact that they can get one a bad credit score. Your credit score is a metric that might become relevant the next time you decide to apply for a loan, an insurance policy or even get a job in the financial sector. Nonetheless, a positive credit score can be a major asset, especially since it can give you a chance to get a loan in a simpler and more reliable manner, later on. Some may argue that this even makes it into a liquid asset.
Investing as soon as you have a budget surplus
One of the most common mistakes that people make is believing that just because they have a surplus, they need to invest right away. Sure, investing can give you a chance to create a passive stream of income but there might be other financial priorities that you need to focus on first. For instance, you need to consider paying off your loans (at least those with a high interest rate). Second, you need to make an emergency fund. Also, you should consider how much you’re paying for your life insurance and your 401K.
Putting too much emphasis on income
Another bad financial decision is deciding to put too much emphasis on income as a metric of how you’re doing financially. You see, just because you have a decent income this doesn’t mean that you’re financially secure. For instance, if you were to lose your high-income job today, for how long would your savings account last. You see, time is a much more important metric than merely income and by realizing this, you’ll be able to get a much financially healthier mindset.
Instead of using your future to pay for your past, you need to use your present to pay for your future. Odd as it may sound, this is the only truly rational way of looking at your current financial status. This means that taking money out of your retirement fund or your children’s college fund is never a good idea.
The very last thing for you to keep in mind is the fact that you’re making financial decisions every single day. Sure, these decisions differ in size and scope, yet, each one of them can set you back or take you closer to your financial goal. The key thing is to learn from every experience (negative as well as positive) and not to allow one poor financial choice to define you.