5 Ways to Stop Repeating Last Year’s Money Mistakes

5 Ways to Stop Repeating Last Year’s Money Mistakes

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Each year I strive to do better than the year before, especially when it comes to money mistakes, and I’m sure a lot of people feel the same way. In speaking to others about their different goals, I’ve noticed a trend. Although many people have personal, career, and educational goals, it seems like everyone has at least one financial goal.

As a personal finance writer and someone who loves diving into money topics, I always encourage people to improve their personal finances. This can include paying off debt, saving more, or getting a serious retirement plan in the works. Goals are key to changing our financial outlook. However, before we can take our money to the next level, we need to identify behaviors that continually derail our progress.

If you set the same money goals for yourself year after year, yet your situation doesn’t change, it’s time for a new plan.

Improving your money is challenging, especially if you don’t know the right ways to manage your finances. There’s also a lot of temptation, so it’s easy to fall off track financially. But while your goals might seem impossible, you can achieve whatever you set your mind to — but you have to stop bad habits.

Here are five simple ways to stop repeating last year’s money mistakes.

1. Acknowledge Where You’ve Made Money Mistakes

You can’t stop repeating last year’s money mistakes until you acknowledge the mistakes you’ve made. Acknowledging our mistakes and errors can be difficult, and it’s easy to make excuses for our past behavior. However, your financial situation isn’t going to change itself. You have the power to reach any goal you set for yourself, but you can’t do this until you identify roadblocks to success.

For example, maybe you haven’t started saving for retirement or built a cash cushion because you have a shopping problem and can’t resist a good sale. Or maybe you’re living paycheck to paycheck because you’re constantly going in your pocket and helping others with their bills.

If you can pinpoint exactly why you’re having trouble, you can adjust your actions and create a plan you can stick with.

2. Acknowledge You Don’t Have a Clue

Then again, maybe you know absolutely nothing about personal finance. If you don’t have a clue about money management, you’re going to make mistakes. But you can change the future by acknowledging your limitations and educating yourself.

There’s a wealth of information available online about basic personal finance. Believe it or not, managing your money is much easier than you think. You don’t need a degree in economics or personal finance courses to learn the basics. Whether you need information on paying off debt, reducing expenses, or raising your credit score, this information is available at your fingertips – but you have to look for it.

And if you’re someone who needs more guidance, you can work with a financial advisor. These professionals can help in every aspect of your personal finance. Maybe your finances are spiraling out of control and you need help organizing your bills or coming up with a debt strategy. Or maybe you need life insurance or a five or 10-year financial plan.

If you don’t have a clue about money management, you’re going to keep repeating the same mistakes year after year. Stop the cycle,  get help and you’ll notice a difference in your personal finances.

3. Set Goals for Yourself to Avoid Repeating Money Mistakes

You may say you want to do this or that with your money, but if you don’t set realistic, clear goals for yourself, you’re going to go in circles. Some people never put their money goals on paper. However, by writing down goals, you’re forced to look at them, and this can motivate you to come up with a step-by-step plan to make it happen. The desire to do something isn’t enough. You need a plan.

Here’s a challenge. For every financial goal you hope to accomplish, write down five or 10 steps you need to take to reach these goals. And for each five to 10 steps, create mini-steps if necessary.

4. Work in Harmony with Your Goals

Now that you know the money mistakes you’ve made and you have a plan to stop repeating these mistakes and reach your goals, you have to work in harmony with your plan. Your financial life is not going to change with the snap of a finger. Nobody is going to wave a magic wand and eliminate your debt or put a six to 12-month cash cushion in your bank account.

A step-by-step guide can only work if you committed to taking action. So if you want to build a rainy day fund, realize you’re going to make sacrifices. This might include cutting back on shopping, entertaining yourself at home, or skipping your annual vacation.

Likewise, you’ll need to take similar measures if you’re trying to pay off credit card debt in the next year. You might have to leave your credit cards at home when shopping, perhaps locked in a safe so they’re not easily accessible. Or you might have to cut your credit cards in half to avoid the slightest temptation. You’re never going to reach your goals if you do the opposite of what it takes to reach them.

5. Don’t Let Setbacks and Money Mistakes Hold You Down

Even if you’re committed and you have an airtight plan, you might have a setback or two. This is common when working toward any goal. However, you cannot let setbacks discourage you.

Setbacks may occur due to situations beyond your control, or due to personal weakness. Regardless of the situation, you’ll continue to repeat your money mistakes if you let every single setback destroy your motivation. You need to pick yourself up, shrug off the setback and continue to move forward.

If you make the same money mistakes year after year, you’re going to stay stuck in the same place and you’ll never get ahead. You might not be able to transform your financial situation in the next few months. But with a doable plan and consistent effort, you could become a different person financially and develop money smarts you never thought possible.

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