Why your biggest money regrets are not about what you did

Financial mistakes are made by everyone: ask Mark Zuckerberg how he’s lost $150bn in a year. But regrets can be overcome.

As property prices, stock markets and super fund balances shrink at the same time, many people are questioning their previous financial decisions.

Did I pay too much for my home? Did I buy the wrong shares? Have I put my super in the wrong place? Did I invest at a bad time? Why did I buy that thing?

Money regrets can have broad negative effects on people’s health – and there’s an interesting way to process them, which was reinforced to me last week in a chat with an experienced investment manager.

The biggest financial regrets you have will probably stem from things you didn’t do rather than things you did do.

That’s because losing money almost always involves a finite amount. If you buy an investment and it crashes to zero, you lose your money but nothing else. If you waste money on an impulse purchase, the cash is gone.

However, the decisions people don’t make – missed opportunities – potentially have an infinite cost if the asset value keeps rising.

Deciding to not buy a house 20 years ago means you’ve probably missed out on tripling your money as property prices continued their long march higher.

Sinking asset prices can spark fresh financial regrets.

I have regretted not investing in Aussie biotech giant CSL 20 years ago, before it jumped from $4.60 to $32 over a decade. Then I thought it was too expensive at $32 and avoided buying it in 2012, only to watch it multiply to the $280 a share it is today.

Overcoming regret is one of the hardest parts of managing money, but there are ways to lessen the pain.

Remember that the world’s wealthiest people also have financial regrets. Facebook founder Mark Zuckerberg probably wished he sold some of his shares before a sinking stock price cost him more than $150bn in the past year.

For the rest of us, here are some ways to handle financial regrets.

1. TALK ABOUT THEM

Nobody likes to discuss their failures, but opening up about money mistakes can help make you financially stronger in the future. You can speak with a friend, family member or professional financial adviser who may put things into perspective and help prevent it happening again.

2. MAKE IT A LEARNING EXPERIENCE

People learn much more from their mistakes than their successes. If a regret shows you have a financial weak spot, seek extra knowledge from the huge range of money calculators, tips and success stories available online.

3. FORGIVE YOURSELF

Humans make mistakes, and experts say people who don’t forgive themselves can suffer health issues. Nobody wants to get sick from losing a few bucks, or a few thousand bucks.

4. BUILD IT INTO YOUR FUTURE PLANS

Ensure your past mistake fuel future positive actions. It may mean cutting up the credit card, signing up to an investment platform to start building wealth, or pumping extra dollars into super to save on tax and grow a nest egg faster.

5. RECOGNISE BUYER’S REMORSE

That feeling of guilt after making an expensive purchase that later feels extravagant is known as buyer’s remorse. We’ve all done it, and should remember that emotion surrounds money decisions. The key is to understand what drove the regret, then avoid it happening again.