If I asked you to make a list of the dumb things you’ve done with money, would it be a two-liner or would you be reaching for a hundred-page booklet?

OK, forget the list. Let’s focus on one incident. What is the most embarrassing, daft, what-was-I-thinking, I’m-a-complete-idiot thing you’ve ever done with money? Be brutally honest here. No justifications, no fudging the details; just plain honesty. (If you have nothing to write down, you are a unicorn.)

Now write it down on a blank piece of paper. Include every detail, especially the ones that make you cringe, cry, or rant at yourself. Forget the rant, though, just write down the incident.

Before you email me to ask what the hell someone who is committed to helping people build their financial confidence is doing asking them to dig up memories that may well be humiliating, just answer the question for yourself. I’ll get to reason I’m asking in a second.

My big fail

For me, it has to do with a decision I made while working on my PhD a long time ago. Even though I’ve worked through all this material, it still makes me shake my head. I had just received the first instalment of a Social Sciences  and Humanities Research Council grant cheque, which was supposed to help cover my expenses while I worked on my doctoral studies. Getting this scholarship was a big deal. So what did I do with the first chunk of change? I “invested” the bulk of it in a time-share condo complex that went bankrupt two months after I signed the paperwork. I had fallen for a sleazy sales job without doing any due diligence. Hell, I didn’t even know how to do financial due diligence back then! My thoughts at the time were all about renting out my allotment of time and making money on that.

What’s most mystifying is that up until that point, I had always – ALWAYS – been very careful with my money, investing it only in boring products like GICs and T-Bills with guaranteed returns.

Did I have any experience renting out condos, let alone time-share condos? No.

Did I know the first thing about investing beyond products I could buy at the bank? No.

Had I ever done anything like this before? No.

Had I previously made reasonable choices with my money? Yes.

Two months. That’s how long my “investment” lasted. And then it was all gone.

The personal recriminations started immediately, in two languages. I couldn’t believe how utterly stupid I had been and I let myself know it frequently.

Why am I telling you this and why on earth am I asking you to think of at least one financial choice you wish you could erase? Very simply, it’s because your past experiences inform your feelings and choices today. Without digging into your financial history to those moments that caused, and still cause, you stress, you will not fully understand what’s driving today’s behaviours.

If some of today’s behaviours aren’t serving you well, you need to figure out where they’re coming from before you can course-correct. In other words, it’s important to pull out the financial skeletons in the closet and deal with them so that they don’t continue to sabotage you.

Now think back to your mistake: Do you judge yourself for it? Do you think less of yourself and your financial abilities because of it? Do you find yourself using demeaning language when you talk to yourself about this incident?

I sure did. You now have a choice, just as I did: You can continue to beat yourself up, which will make you feel terrible and may well continue to yield unwanted results, or you can learn from the mistake, forgive yourself for it, and leave it in the past where it belongs.

Here’s an important lesson that I’ve learned over the past twenty years:

Your past choices do not define who you are and they need not define your future.
Learn, forgive, set a new course, and move on.

“Well that all sounds great, Doris, but how do you pull that off?” you might ask. Two simple questions will do the trick.

Isn’t that interesting? I wonder why I did/do/think that?

Whenever you’re find yourself reacting negatively to a financial situation, instead of activating the jerk in your brain, I suggest you ask yourself these two questions: “Isn’t that interesting? I wonder why I did/do/think that?” If the answer doesn’t come to you immediately – and it probably won’t in a complex situation – sit with these questions. Write down any answers that come to you and keep asking the questions whenever you feel the negative emotions starting to pop out.

Drop the judgement; that’s counter-productive. You simply want to understand what’s going on, to get to the underlying beliefs. Then the fun work of changing your beliefs begins.

Case study: Janet’s frustration

When Janet* came to me for help, she was at her wits’ end. Her debt was increasing and her savings remained stagnant despite the fact that she earns a great salary and has no dependants. She couldn’t figure out what was going on. I asked her what she thought the problem was.

“I’m just hopeless with money!” she replied.

“Why you believe that?” I asked.

“Well it’s obvious – I make a bunch of money and it always disappears regardless what I do. It’s ridiculous. I’m ridiculous!”

I stopped her in mid rant.

“OK, let’s break this down. What makes you think you’re terrible with money? Tell me the specific results that make you believe this.”

She started in on her list: Her credit card balance seemed to be inching upward despite the fact that she put more and more money on it every month while controlling her spending. I asked her to pull out her credit card statements for the last three months. As we looked into the details of her expenditures, she became quiet. She was not, in fact, controlling her spending at all. Every time she increased her payments, she would also increase her spending by a greater amount. The surprising thing to her is that she was not aware she was doing this. She then went through a year’s worth of credit card statements and saw the pattern repeating itself. This time, though, instead of beating herself up, she took a new approach.

“Isn’t that interesting,” she said. “What’s up with that?” I asked her about her family’s financial history – had she seen this sort of pattern before? What were her parents’ habits with money? What had she learned or been told as a child? Was there a particular incident that popped to mind when she thought about this financial pattern?

And that’s when the penny dropped for her: She was repeating her parents’ life-long struggles with debt.

When she was growing up, all conversations about money revolved around the belief that there is too little of it to cover all of life’s necessities. Try as you might, the thinking went, you can never make enough to “keep your head above water.” She had internalized this belief without realizing it and was playing it out in her own life despite her strong earnings. She would buy mindlessly, spending on things she didn’t need or even want.

All that changed when she realized the “why” behind her actions. We worked together to establish new behaviours that are congruent with her values and goals. Today, Janet is on her way to building an investment portfolio with no credit card debt in sight.

Burn baby, burn

Back to my scholarship money: When I started to ask uncomfortable questions about how I could have fallen for a bad sales job, I realized that I had wanted to up the ante with respect to investing. I felt it was time to move beyond simple products with low, guaranteed returns, but I did it the lazy way. The sales pitch sounded good, I didn’t know how to investigate the offering, so I decided to trust the guy. It’s a big company, the numbers look good, everything’s going to be fine, right?

Sigh. What’s ironic is that I was, and am, a researcher by training. OUCH!

My lesson was this: There are no short-cuts to mastering investing. I needed to understand the potential investment before even dreaming of putting a dime in it and I needed to educate myself about investing in general. That lesson has served me very well over the years.

Have I screwed up since and ignored the lesson? Unfortunately, yes, when I first started investing in real estate. I trusted a sales-y realtor without doing my own homework and it came back to bite me in the backside. This time I had run the numbers on the property and knew that it cash-flowed well, but I did not know enough about the area. I took the realtor’s word for it instead of doing more digging myself. Solid area, my eye! Hello prostitutes and gangs just around the corner.

Thankfully, I learned the biggest lesson of all: Forgive your mistakes and turn them into valuable lessons. My own twist on this is that whatever money I have lost or wasted through educational experiences, I am determined to re-create fourfold. So far, so good making lemonade from lemons.

So take your mistakes, write them down on a piece of paper (I’m personally fond of index cards for this purpose), then tear them up. Better yet, burn them. Yes, burn. I have recommended this approach to everyone I’ve worked with. Is there an data to back up its effectiveness? Nope. It’s just really, really satisfying.

It’s time to put out a message to the universe: You’re done beating yourself up and paying for past mistakes. Moving forward, you’re writing a new story.

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*Not her real name

Photo by Abigail Keenan on Unsplash