3 Ways to Let Go of Financial Regrets (2024)

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Co-authored byBrian Stormont, CFP®

Last Updated: May 10, 2021References

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   Own up to your mistake. Before you can let go of financial regrets that haunt your past, you first need to admit to yourself that you made a mistake. People who have made financial mistakes are often prone to repeat the same error over and over, continuing their financial regret and the cycle of frustration. By owning up to the mistake(s) you’ve made, you’ll be able to take responsibility for the error and not repeat the mistake.^[1]

   • You can own up to the mistake by admitting that you’ve handled elements of your finances irresponsibly. Take responsibility and don’t seek to pass the blame on to other individuals.
   • If you are in debt or bad financial straits, you need to face the problem head-on. Ignoring it won't make it go away, and neither will feeling sorry for yourself.
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   Focus on the things you did right. Even if you feel likely somehow sabotaged yourself, or made poor financial decisions in the past, remind yourself that you did the things you thought were best at the time. Hindsight reveals many of our past mistakes and can often cause regret, but at the time when you made your decisions, you did so with the best information at hand.

   • Remind yourself that, in fact, you may have made a good decision with the limited information available to you at the time.
   • For example, imagine that you splurged on an expensive personal vacation before your spouse for filed for divorce, leaving you with no money left over. While this may be a financial regret for you now, before knowing about the impending divorce, your decision was not necessarily a bad one.

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   Don’t be too hard on yourself. Everyone can make mistakes, and we’re often much quicker to blame ourselves for poor decisions than we would be to blame others. Think of how you would comfort and support your best friend if they made a similar mistake, and try to develop that kind of compassion toward yourself as well. If you find yourself engaging in mental self-criticism, stop and focus on positive decisions that you’ve made instead. Part of letting go of financial regrets is the ability to let the past stay in the past, without constantly using past mistakes to berate and put yourself down.

   • If you catch yourself engaging in excessive mental self-criticism, stop and divert your thoughts to something else. Remind yourself: “I am more than my past mistakes.”
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   Learn from your mistakes. There's always a silver lining, even if it's hard to see at the time. Maybe you learned how to budget or be more responsible. You also gained practice in dealing with financial mistakes and related emotional reactions. Think about which of your responses helped you recover, and which ended up being counterproductive. Both of them teach you how to do better next time.

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   Focus on your financial future. Obsessing over regrets will leave you looking to the past and the mistakes that it contains. Although there are appropriate times for self-pity and regret, the emotions are ultimately unproductive and may even cause you to repeat the behaviors that caused you regret in the first place. Rather than doing this, focus on the future and ways in which you can overcome the financial situation you find yourself in. Planning a financial recovery can also provide a sense of mental clarity and feeling of control that will improve your mood and outlook on life.

   • As part of focusing on the financial future, you may wish to speak with a financial advisor who can help you deal with any debt you may have.
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   Use your guilt as an opportunity for personal financial growth. While guilt and regret and negative emotions and need to be let go, they can also help motivate you to avoid financial mistakes in the future. Optimism about your financial future can be helpful psychologically, but it’s also important to start implementing practical financial choices that will reduce your risk of future financial mistakes:^[2]

   • Take action sooner rather than later. This applies to many aspects of financial life: don’t get behind on credit card or car payments, as interest will pile up quickly.
   • Tackle one task at a time so you start to gain momentum and avoid feeling overwhelmed. This momentum will help you push through each obstacle as it comes and decrease guilt.
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   Set up electronic automatic payments and reminders. If you feel stressed out by the number of payments you have to make, take the pressure off (and make sure bills are paid on time) by using an auto-pay feature or setting payment alerts for yourself.^[3] Most credit card websites allow you to set up monthly automated payments, as do websites for utilities and services like electricity and internet service.

   • If you prefer to make your payments manually, some of the credit card and utility websites can send you an automated reminder a few days before a payment is due.
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   Make a “monthly regrets” budget. A monthly regrets budget is essentially a balance system that allows you to track your overspending and compensate appropriately. For example, imagine you splurged at dinner and spend $100 on the meal when you only meant to spend $40. Since you’re now $60 in the red, you’ll need to save $60 on other expenditures. You could bring your lunch to work (saving the ~$7 you might be spending to buy lunch) and compensate for the $60 “regret” in five to seven work days.^[4]

   • The monthly regrets budget will give you room to make mistakes and overspend each month by giving you a system to compensate for these oversights.

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   Stop overspending. Overspending is the single most common reason for financial regrets.^[5] People spend more money they can afford, and then find themselves saddled with debt over unnecessary purchases and investments. Once you’ve put together a monthly “money regrets” budget, stick to it; don’t give into the temptation to purchase goods or services that put your total expenditure over your total income.^[6]

   • It’s worth noting your motivation for overspending so you can reign in these impulses in the future. For example, do you overspend absentmindedly, or do you overspend socially (only when out with friends)?
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   Bulk up your financial savings.^[7] Many people also experience financial regret due to a lack of savings funds. For an individual without savings, any financial emergency—from medical bills to car payments—can be ruinous. To help leave your savings account intact, view it as money for emergencies or for unexpected expenses; don’t think of savings as a large reservoir of spending money.^[8]

   • As a rule of thumb, you should always have on hand (e.g. in an easily accessible bank account) at least six months of net income.
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   Plan ahead for retirement. No matter your age—provided that you’ve at least graduated from college—you should be thinking about your retirement, especially once you’ve found a career or are steadily employed. A large source of financial regret for individuals later in their lives comes from the fact that they did not plan ahead or save enough for retirement.^[9]

   • You can avoid this mistake by increasing the amount of monthly savings you set aside (earmarked “for retirement”) or by increasing your monthly payments into your employer’s retirement system or a 401k account.
   • As a general rule, about 20% of your income should be saved for financial priorities, including retirement and debt payment (if applicable).

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