Being financially confident will serve you well in your money journey. Here are some tips on how you can build your financial confidence and start wcrushing your money goals.
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As young adults and young couples, we have the potential to build wealth and make a change in our lives and those around us.
However, this potential is hard to see when we lack financial confidence within ourselves.
This is what we want to change. We want you to become more confident in managing your money and building your financial future.
Build Your Financial Confidence
Our definition of financial confidence is when you have the self-assurance that your decisions and actions will lead to a brighter financial future.
A study reports that financial confidence is strongly linked to financial wellbeing. Suggesting that the lack of financial confidence has adverse consequences.
Financial confidence is a lifelong process that you’ll develop over time and below are the tools to help you become more financially confident.
Let’s get into it.
Face Your Fears
When it comes to money, 80% of the struggles are actually related to your money mindset rather than the numbers. (Borrowing this concept from the 80/20 Principle book).
Your present situation can be scary to think of, especially if you’ve buried your head in the sand for some time.
But this is where our money fears grow and we start to believe them. Money fears are real and can include:
- Being scared to know how much debt you’re really in
- Scared to find out how much money you spend
- Fear that you will lose your money if you invest
- Thinking your friends will not accept you if you don’t buy branded clothes
- Fear that your partner will be ashamed of you if they found out about a financial habit you have
The list goes on and on.
The best way to overcome your money fears is by facing them.
Facing your money fears means you first accept the situation that you’re in and be fully aware of your emotions and thoughts.
The natural and organic process to healing and growth starts with humility. The humility of acknowledging and accepting that you have money fears begins the process.
Money fears may be your reality today but it’s in your power to change your reality!
I can’t promise that your friends won’t judge you or your partner won’t be ashamed, but YOU shouldn’t!
Stop being your own worst critic and biggest hater and start being your best confidant and motivator.
It will be painful in the beginning but you will make it through. The joy of defeating your fears is so much better than staying in the shadows and living in fear.
Know Your Financial Numbers
Numbers can be daunting and scary but they don’t have to be.
Knowing your core financial numbers is a good foundation regarding the practical aspects of building your financial confidence.
Knowing your numbers is about being knowledgeable about your current financial situation. So it’s time to stop hiding or neglecting to look at the numbers.
The key financial numbers you should know include:
- Your monthly income
- How much your outgoings are
- The status of your debts and savings (net-worth)
- Your credit score
Remember our definition of financial confidence is you being self-assured that your decisions will lead you to a brighter future.
But that’s not possible to do if you don’t have an understanding of where you are.
For instance, how will you know you’re making the right decision that will lead you to be debt free when you don’t know how much debt you have?
A budget is a great place to begin because it helps you understand so much about your financial position and about your numbers.
One important thing I’ll say is that the numbers that you are looking at today do not define your future.
Also, your numbers do not define who YOU are. They are just numbers that reveal your financial position, not your self-worth.
Start Talking About Money
Talking about money begins the process of breaking the silence and opening up those emotions you’ve been hiding for so long.
This is one of our biggest money tips we can give you!
I’d advise you to find someone you trust and can rely on to talk to. This may be a friend, partner, mentor, coach etc. I’d go a step further and suggest you talk to someone you can vibe with.
I’m an absolute believer in money talks because the more you talk about something the more comfortable you become about it.
Money is such a personal subject for many people that we don’t talk about it easily, but having the right person(s) to talk to is the key.
Money talks don’t have to be “official” or even long. Instead, try having a 5 minute conversation with a friend about who you bank with. Ask your sister/brother about how they are saving money right now.
The aim here is that the more you talk about money the more comfortable you become with finances. In addition, this leads to you having more courage to face your money fears and start to change the narrative.
I want to live in a world whereby asking someone about their favourite money habits is as common as asking them what movies they love.
Talk to the right people and you will learn some real gems from them, even in the 5 minute quick chats.
Get Knowledge and Information
I love knowledge. But as I always say, knowledge is powerless without action!
However action without knowledge is foolish. So to start taking the right actions that lead to a brighter financial future, gain the right knowledge.
Educating yourself about managing your personal finances will empower you to start to change your mindset. A changed mindset leads to a changed attitude, and ultimately a change in actions.
Read books, listen to podcasts, follow financial education social media pages (@skilledfinances), watch videos, attend seminars and webinars.
Do just one of the things listed above often and you’re already making progress.
For instance, you could learn how to build multiple income streams to boost your income, or a method of paying off your debts that did not know about before.
Above all remember this, there’s always something you can learn and something to gain. New knowledge teaches you new strategies to enhance your financial situation and build your financial confidence.
Plan Your Future
Take some time to ask yourself what you want from your future so you can start to plan the direction of your life.
One of the challenges with young adults today is that we often think about today and not too much about the future.
Or in some cases, we have a plan for the future but our habits and lifestyle mismatch our dreams.
How?
Take some time to consider these questions:
- Where do you want to be one year from now?
- What do you want to achieve over the next 12 months?
- What would you like to change about your life within the next 12 months?
- Who do you want to become over the next 12 months?
- What would you like your financial situation to look like in 12 months time?
Don’t fall into the trap of answering these questions based on what you are capable of today, but be imaginative about what you really want in a year’s time.
One year is not a lot of time, but it is also more than enough to make good strides towards your goals.
As you can see, not all questions are money related. This is deliberate and not all answers should be money related.
Money is only a tool that enables you to be who you want to be and do what you want to do, this is one of the benefits of having a budget.
The aim here is to channel your financial habits and goals towards the dreams you have.
You may want to become a healthier person over the next 12 months broken down into working out more and eating more plant based meals. You’ll then align your financial food spend and personal care spend towards that.
You might yourself some home work out equipment and start eating what allows you to reach your body goals. THIS IS NOT A WASTE OF MONEY!
Remember, money is only a tool that enables you to be what you want to be and do what you want to do, so use it well.
Therefore, align your money habits towards your dreams and goals and you will build your financial confidence!
Again, financial confidence is being confident in that your financial decisions and actions are building the life you want.
Take Action
Financial confidence is a lifelong journey so commit to yourself that you will always work on your financial confidence from today.
Which of the above stood out to you the most and you will start immediately?
Share this with your friend, family, or partner and discuss how you could support each other as you build your financial confidence.
Download our Free Financial Health Check to give you a good overview of your financial health.
We’d love to hear how you’re getting along so feel free to get in touch with us.
Knowledge is powerless without action
So take action, and take care
Thando