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Poor Financial Decisions & Money Regret
We've all made poor financial decisions. You have, I have, and every other person out there has. What's more, each of us will continue to make poor financial decisions from time to time, regardless of how knowledgeable we are about finances. Last week, I discussed the money taboo in our society. Today I am going to discuss poor financial decisions and shame around those decision that are exacerbated by that taboo.
Making a poor financial decision is nothing to feel shame about. All of us act emotionally at times and make financial decisions colored by emotion. This can lead to bad results. Allowing the money taboo to prevent you from seeking help can create far more negative consequences than the initial poor decision, however. The period following a poor financial decision is exactly the time to seek advice from others; whether that be a financial professional, a parent, or a friend.
If you find yourself in a position where you have made a poor financial decision that is large enough that you need to make another decision about how to deal with it, don't go it alone. Seek help. Speak with a friend. Call a financial advisor. Talk to someone close to you. You will likely feel some embarrassment admitting your initial poor decision, but that is a small price to pay to prevent long-term severe financial damage.
Your asking for advice will also help others. They will see you as an example of someone willing to discuss their mistakes and talk about money openly. This may make them more willing to seek help when the time comes that they make a poor financial decision.
Regretting a financial decision is not harmful, but allowing the money taboo to prevent you from seeking help can be very harmful. The money taboo in our society impacts us in many ways. Exploiting our money regret is one of the most powerful.
Budgets and Financial Plans Are About Balance, Not Sacrifice
Having a good budget and financial plan does not mean giving up everything important for you today to plan for later. Often when I have discussed budgeting with people, they have indicated they don't want to budget because they don't want to give up many of the things they value now for an uncertain future. A good budget, by which I mean a budget you will be committed to and brings you toward your goals, does not require you to give those things up that you value most. A good budget offers a tool to help you balance your present financial self and your future financial self.
If you have put together a budget that takes into account your values and your goals, you are already on the path to achieving this balance. The way you have built the budget will force you to prioritize what you value more. Do you prefer to have every television station possible available to you now, or would you prefer to purchase a new, fancy car in five years? You get to make that decision when you establish your budget. The budget itself does not judge your spending, it only forces you to decide what you value more.
A financial plan provides the exact same mechanism. A financial plan does not judge your decisions, although your financial planner may do so. A financial plan provides a tool to help you decide whether you value a current expense more or less than a future expense. It's your choice to decide which to pursue.
Budgets and financial plans help you create balance between the present and the future. They offer tools to help you prioritize what financial goals you value most. Don't buy the misconception that a budget or financial plan is about giving up what you value today. Budgeting and financial planning are about balancing today and tomorrow.
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