Financial Thoughts

How To Live With Bad Financial Decisions

Man cutting money

We all make mistakes and involve in bad financial decisions sometimes. Financial pitfalls happen often enough, although some can be more serious than others. Don’t give up hope because you can fix the problem and rectify your financial situation with a few steps.

Don’t Spit the Dummy

Try to avoid extreme emotional responses. It’s a natural reaction when a money matter goes terribly wrong a person panics or falls into a deep depression. That can cause you to make a rash decision, or you do nothing and shut down. A shopping spree is the answer for some people. That will make matters worse. Relax, think positively and pull yourself together emotionally.

What Happened?

Work out what happened and how did it happen.

  • Was it just one bad decision, such as buying something you couldn’t afford?
  • Is it a regular occurrence, and perhaps a bad spending habit?
  • Maybe it was something over which you had no control like an accident, a breakdown, a large medical bill not covered by insurance, or you lost your job?

Pinpoint the Exact Problem

Then look at your options and any resources you might be able to throw at the problem. It’s best to know how much you have and how much you owe. Depending on how bad it is, you might be able to make a few adjustments and turn things around. An example would be returning the item or selling it if it’s something you overspent on. Sometimes, the situation cannot be so easily fixed. List your assets and seek professional help. There are experts out there that know more than you do.


If you owe money to different creditors and the bills are piling up, it can be overwhelming. If your resources are limited, you better develop a strategy about which problem to fix first.

  • Check your expenditure.
  • List your financial obligations, your necessities at the top, stuff you don’t need and can do without at the bottom.
  • Make a plan.

Once you have worked out the area of finances that is the most urgent, outline the steps you will take to reduce debt and save money.

Create a Budget and Stick to It

Don’t think short term – think long term. We learn from our mistakes. Learn from this one. A budget is the only way you can recover from a financial setback, a bad money decision, and making sure it doesn’t happen again. You can recover, you just need to know how.

6 Steps to Take to Avoid Making Bad Financial Decisions

Step 1: Know What’s Truly Important

What is important to you? It’s hard to work this out when you are under financial pressure. Ask yourself the question, “What makes my life richer?” For example, spending time with your children or your spouse, and staying healthy might be most important to you. Once you know what means the most to you, then you will find your financial decisions will keep you on the same track as your life values.

Step 2: Spend Wisely

Be proactive about how and where you will spend your money. Cut household expenses and get in the habit of asking yourself “Is this purchase really necessary?” It’s worthwhile checking to see whether all your loans and Credit Cards can be refinanced or consolidated to help lower monthly repayments.

Step 3: Professional Help

It can help you to make the right financial decisions if you research all your options. The more research, the better the outcome. You might want to run things past a financial advisor. They have more experience than you and certainly more relevant information.

Step 4: Take a Selfie

Man taking a selfie No, not a picture of yourself. We’re talking about a bit of introspection. Have a quiet moment with yourself to give you time to absorb the information. Do you have any nagging doubts about your decision? How’s the ‘fear’ factor? Do you have all the information you need to make a qualified decision? Don’t ignore that small voice or that gut feeling. It’s trying to tell you something, and you better listen or at least go over all the details to make sure you are entirely comfortable with what you are about to do.

Step 5: Take stock of where you are now

Your spending decisions in a tough market should be based on the present, and you should be cautious about the future. That means don’t spend money until you’ve received it, no matter how confident you are that it’s going to come. Whether it’s an inheritance or a ‘definite’ commission check. Avoid using, or moderate your use of credit cards. Don’t spend money unnecessarily because you’re positive the economy is going to improve. This is not the time for impulsive purchases. Being cautious about the future means that even if you believe your job is secure, or your business is doing well, be aware that things can change.

Step 6: Look after Yourself to Maintain Creativity

Nothing, absolutely nothing, replaces good health. Optimism, creative ideas and a vibrant approach to life, are all a result of looking after your health. You may feel stressed, or say you are too busy, or that things are tight, and you don’t have time for this, but when you are in a creative state and excellent health, you see things more clearly and from other perspectives.

In this way, you are better prepared for the challenges that life brings.

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