15 Tips for Recovering From a Financial Mistake

Managing your money can be complicated, and it's hard to do the right thing all the time. As a result, anyone is prone to making financial mistakes.

If you make an error, the important thing is to find a way back from it with the minimum of damage to your long-term situation. These 15 tips can help you to do just that.

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The first key step to recovering from a financial error is admitting that you made one.

It can be hard to accept if you've made a bad investment, used the wrong kinds of debt, or forgotten to pay a bill and damaged your credit. But whatever mistake you made, you can't begin to fix the problem until you acknowledge that you've veered off course.

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Once you've admitted to yourself that you've made a mistake, it's time to look at the fallout.

This involves taking the time to assess the long-term and short-term implications of the error so you'll be able to define exactly what issues you must resolve.

There's no use looking backward and considering the what-ifs after a mistake has been made. In fact, doing so is only likely to make it harder for you to move forward in the way that you need to.

Come to terms with the error and commit to moving past it so you aren't plagued with guilt or regrets but instead are focused on making things better in the future.

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The next step is to research and consider all the options available to you for correcting your error. These will vary depending on the mistake you made.

If you took out the wrong kind of loan, for example, you could look into refinancing. Or if you made a bad investment, you could take your losses and start researching assets you could buy in the future to do better.

There are a lot of unscrupulous people out there who prey upon individuals who made financial errors. Don't fall victim to them.

If someone is offering you a quick fix -- whether it's an instant correction to your credit score or an easy path out of debt -- chances are good that they won't be able to fulfill their promise and you'll only end up out more money if you try their approach.

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Once you've come to terms with the fallout from your mistake and explored your options, take the time to define what your goals are going forward.

For example, if you've gotten into a lot of debt that you regret, your goals could be to refinance and lower the interest rate, make a debt payoff plan, and build a budget going forward that allows you to avoid borrowing.

ALSO READ: What Is a Financial Plan and How to Make One

After you've listed everything you want to accomplish to fix your mistake, focus first on identifying and completing the top priorities.

This would typically involve taking any steps necessary to avoid any future loss of funds or damage to your credit.

For example, if you've bought a house you can't afford, the immediate priority would be figuring out how to make payments in the short term and get the property sold without foreclosure or missed payments.

Identifying your goals and establishing your priorities can be a good start, but you need a clear plan of action to recover. This should involve listing actionable steps you can take, along with a timeline for when you will implement them.

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In some cases, the mistakes you made may not be easily correctable or you may not know how to follow through on fixing them. If that's the case, it may be necessary to talk with a financial professional such as a lawyer or an accountant.

If you need professional help, don't hesitate to get it, as failing to do so could only end up making your situation worse in the long run.

Once your plan is made, it's time to start implementing it. Work on accomplishing the tasks on your to-do list ASAP and even consider automating as much as possible so you ensure the right thing is done.

For example, if you've made the mistake of getting deeply into credit card debt and have made a plan for early payoff, you might want to automate a payment to your card company each month for the amount you've decided to devote to becoming debt-free ASAP.

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Financial mistakes usually cost money. If that's the case with you, stop spending immediately for a limited period of time so you can devote your funds to getting back on track.

It will take sacrifice to give up spending on all but the necessities. But remember this is temporary, and once you've recovered, you can treat yourself to some fun spending again.

ALSO READ: How to Stop Spending Money You Can't Afford To

Making (or reworking) your budget can help you to prioritize accomplishing the goals you've set to correct your mistake. For example, you might allocate more money to investing to make up for losses or could set aside extra cash for debt payoff after cutting spending.

Expecting to correct a financial mistake immediately could be setting yourself up for failure -- especially if your error was a big one.

Know that it will sometimes take months or even years to get back on track, and give yourself the time to accomplish your goals so you don't get frustrated and give up.

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It's a good idea to keep tabs on your recovery efforts so you can see if you're on schedule to accomplish your goals and undo the damage.

Checking your progress can also help you see if your efforts are paying off -- which could motivate you to work harder -- or could alert you to the fact that you need to change course because what you're currently doing isn't working.

Finally, you'll want to make absolutely sure you create a plan going forward to avoid making the same type of mistake in the future.

Whether this means learning more about money management or changing your spending habits, it's crucial to have a road map to follow so you don't end up back where you started.

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By accepting your mistake, assessing the fallout, and defining your goals, you can hopefully undo any damage and get back on track.

Taking as many of these 15 steps as possible should go a long way toward ensuring recovery from even the biggest financial errors.

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