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Hundreds of New Years' resolutions bombard us at the start of a year in newspapers, magazines, and on the television, radio and internet.   The resolutions related to improving financial health usually include (a) saving regularly (b) maximizing contributions to tax-deferred accounts like 401ks and IRAs (c) curtailing spending (d) changing a job or revamping a business and (e) paying down debt, especially credit cards.   All very good ideas.   But one key piece of advice is usually missing, or just implied and not boldly stated.    Make fewer unproductive mistakes!

I believe that the most important factor in one's financial health is the power to handle serious mistakes.   Honest reflection brings realization.   It's one thing to have not socked away money into retirement accounts when you are in your twenties and thirties. It's even more serious to have neglected to do it in your forties and fifties after realizing your mistakes.   Realization can lead to rectification.

Taking responsibility is critical in order to move forward past mistakes. If we don't own up to our own failings, we then remain shut to finding ways to improve.   I know someone who recently failed a college math course, and at first blamed the professor as grading too harshly the projects that made up one-half of her total grade.   When the student came to accept responsibility, she then saw that the other half of her total grade was based upon test scores, which would have been much better had she studied harder during the year.   That realization will not only lead to her adopting better study habits to pass the next time around, but to being more responsible in other areas of her life as well.   Recently I realized that I made errors in preparing a client's business tax returns by overlooking the deductions for contributions to retirement plans.   I was mortified by my mistakes, as I take much pride in being thorough, careful, and doing my work well.   Luckily, my client was understanding and expressed his continued confidence in my work, and that the mistake was an exception.   I prepared amended tax returns to get the refunds.   The silver lining for me was that I realized better the understanding nature of this client, and perhaps for him perhaps was how seriously I take my work.   And it led me to improve my double-checking procedures.

Mistakes have many bystanders.   Sometimes, we are caught up in another person's mistakes, and the effects can be serious.   Like business partners, one spouse's finances are impacted by another spouse's actions.   Let's say one spouse's bad habits like smoking, excessive drinking and over-eating (i.e. perpetuated mistakes) lead to sickness and premature death.   The results could be more expenses, less income and generally a poorer financial condition for the other spouse.   However, the well spouse may be able to change the underlying causal circumstances and perhaps help bring about the initiative in getting the right help and empowerment that leads to a better situation for both of them.  

Mistakes show us warning signs.   My 89-year old aunt was recently in a rollover car accident, and fortunately she and two passengers escaped without serious injury.   The accident got her to give up driving, taking a wise step.   Often, our instincts can alert us to errant behavior.   Think about the bigger mistakes you have made in your life.   Didn't an inner voice warn you something was about to go wrong, yet you continued?   Going ahead, we should pay more attention to our feelings, admit our mistakes to others and ourselves, and through our humility take new paths that are more productive and help us grow.

Balance is key.   Surely, we should not strive to be error-free, or we will not take the risks inherent in life.   Perfectionist behavior is very dangerous.   Yet, we must try to avoid mistakes that cause harm to ourselves, that are distractions from our goals, and that can lead to serious problems in our life and our money.   One suggestion is to be mindful of the importance to continually seek balance between a willingness to make mistakes and an awareness of their potential harm.   Thomas Watson, the founder of IBM, once said, "The surest way to success is to double your failure rate."   Generally, good advice.   Unless we try, and are willing to accept the consequences, we can't grow.   However, don't get seduced by ambition.   Be aware of its toll.   For many years, I invested large amounts of time and money into invention after invention, project after project, in the pursuit of monetary success.   Had I been more balanced and been more appreciative of what I was giving up, I probably would have been more careful in my endeavors and made fewer mistakes.   With maturity, I got to see some of my own failings and limitations underlying my behavior, hopefully leading to more prudent and responsible actions.  

Mistakes can guide us on new paths, meeting new people, leading to fuller, richer lives.   Alongside our mistakes and the mistakes of others are opportunities to express love, humility, forgiveness, responsibility, faith and hope. What mistakes have you been making that you'd like to change?   Who among your relatives, friends and advisors may be called on for help?   Who can you help in mistakes you see being made?

About the author.

Frank Sisco is a CPA and Personal Financial Specialist, and author of many articles about personal finance and issues of life and money.   His firm, Financial Management Corporation, is located in New Rochelle, NY.  Frank makes his home with his wife and daughter in New Rochelle, NY.  He can be reached at 914.740.4422 or by email at ideasmoney@aol.com.  Visit his website at www.LifeAndMoney.com, which contains this and prior articles.