Nobody likes to talk about their financial mistakes. Yet we've all made them, without exception. When we make a bad investment, max out a credit card, overlook a payment, buy a car or sofa we don’t love, or make too large or small a gift to a charity or family member, we tend to judge ourselves. Self-judgment creates the breeding ground for a much more harmful feeling: shame.

A 2021 study found that financial shame triggers paralysis and impulsive financial decisions. For example, when I felt the shame of buying a car I didn’t love, it led me to impulsively replace it with a car I couldn’t afford. It's a vicious cycle: self judgment → shame → paralysis/impulsivity → worse outcomes → more self judgment → more shame.

I see this happen most often with real estate. Someone misses an opportunity to buy a house that later doubles in value. The shame of missing that doubling pushes them to either impulsively buy the next house to make up for it, or swear off buying a home entirely because nothing will ever feel as good as the deal that got away. 

Why Money Shame Hits So Strongly

A few reasons stand out:

First, money is tied to our sense of survival. In our society, you simply can't live without it. That primal link means financial losses of any size don't just sting — they feel like threats to our very existence.

Second, and perhaps more insidiously, Western culture has conflated net worth and self-worth. They are not the same thing. Your net worth is one narrow measure of your life — it says nothing about your health, your relationships, your wisdom, your character, or your potential earnings. A financial mistake doesn't diminish who you are, or your value as a person.

A third factor is that money mistakes are measurable. If you weren’t a great friend to someone last year, the impact is hard to fully quantify. But if you lost money, that loss is represented by a number. And our minds fixate on what seems solid.

Last, because nobody talks openly about their mistakes — only their wins — we assume we're the only person with a financial setback. But even people with PhDs in finance make mistakes, often because of overconfidence. Money mistakes are universal but the silence around them is what makes each of us feel alone and that only increases our shame.

A Practice Worth Trying

Write about a financial mistake in the third person — using your name, or simply “he/she/they." Write only the facts of what happened. Creating this intentional distance between yourself and the protagonist reduces your tendency to blame yourself for what happened, and lets you see the situation more objectively.

From there, ask yourself: What belief was I acting from? Often it’s something we inherited, such as a message from a parent about money, a deep-rooted fear. When you can identify that, it becomes easier to have compassion for the person who made that choice. And that compassion is what frees you to move forward.