Estimated reading time: 4 minutes
Financial confidence means you have complete trust in your abilities to properly and successfully manage every aspect of your finances. So if you don’t feel you can trust in your instincts to make money choices or are completely unequipped to handle your finances, then chances are you just go quiet when anyone starts talking about money or laugh it off saying ‘I’m terrible with money’. But what if I told you it doesn’t have to be this way? That, even though financial confidence doesn’t happen in a day, you could adopt a series of actions to create a new set of money habits so you’ll have confidence you’re making the right choices for you and your money?
Well, you can. And here are my 5 favourite tips to get you started with shifting your money mindset and creating a new set of habits that will give you complete confidence you’re making the right financial decisions.
1. Invest Time and Money into Getting Financially Educated
Knowledge alleviates fear and at the root of financial confidence is literacy and awareness. To have confidence that you’re making the right financial decisions you’ll need to have a good understanding of basic financial skills, concepts and principles. When you begin to grasp the underlying principles behind finance, your confidence will grow and that feeling of guessing your way through when it comes to managing your money will be replaced by a confident assurance that you’ve got everything covered.
2. Review Your Conscious and Subconscious Beliefs About Money
Everyone has their own set of beliefs in every area of their life, including money. These beliefs are at the root of the decisions you make, how you make them and how you feel about money. When a perception about money has been sustained over time, it becomes a mindset. Mindset affects actions. There may be some money beliefs that you may have picked up as a child while growing up, where you made a wrong choice, or you feel someone take advantage of you.
Maybe you heard your parents or other people you respect say some things about finance or act in a particular way in the face of financial challenges. These snapshots from childhood sink into the subconscious and determine your confidence, or lack of, when it comes to money. You may have heard words like:
- Money doesn’t grow on trees
- Making money is hard
- Things are difficult
- Everyone borrows at some point, no one is debt-free
- We don’t have enough money
All these words when absolved in your subconscious will play out in later years as financial timidity. In your journey to financial confidence, identify those negative beliefs you have about money and where they come from. Once you have done that, you can start working to replace them with more positive beliefs.
3. Get Help from Financial Experts
You don’t have to do it all yourself and know everything about finance. You can achieve financial confidence by leveraging the knowledge of experts. In fact, many people who are confident with money only have a grasp of the basics choosing instead to surround themselves with competent people and leverage their knowledge of experts in the field in making financial decisions and managing their money.
4. Have a Good Financial Plan While Focusing on Small Improvements
A financial plan is a detailed and all-encompassing picture of your finances, as well as the financial goals you are aiming to achieve. Knowing what you have and what you want to achieve will give you a feeling of stability. A recent survey has shown that 83% of people without a written financial plan experience timidity when it comes to their finances. So if you haven’t, write down your financial plan, it’ll make a huge difference and positively impact your confidence level, as well as focus your mind on your financial goals whether that’s paying off your mortgage, saving for a house or debt repayment.
5. Build an Emergency Fund
An emergency fund is a pot of money set aside to take care of the unexpected or unplanned. It’s a safety net in the event the unexpected happens, for example, you get sick, made redundant or have to pay for major repairs on your house. Having an emergency fund will give you peace of mind that you can handle the unexpected and you’ll feel financially confident.
Financial confidence begins when you decide to work with a plan and stick to it. Being able to build confidence financially is not a product of wishful thinking but consistent actions. Start acting now and watch your confidence grow.