Three Ways to Grow Your Financial Confidence
Don't buy into the "lack of" myths
What's holding you back from financial freedom? It's an important question to consider, and if you spend some time really thinking about it, the answers might surprise you.
According to a recent report by financial services company Prudential, " Financial Experience & Behaviors Among Women ," only 20 percent of women surveyed "felt very well prepared" to make wise financial decisions. And that's down a percentage point from a survey nearly a decade ago in the heat of the Great Recession.
According to the same report by Prudential, the following three reasons were given for women's lack of confidence:
1. Lack of direction: "More than a third of women surveyed (36%) who say they aren't prepared to make wise financial decisions contend they aren't even sure what they need to consider when evaluating their options."
2. Lack of time: "About the same number also say they wish they had more time to spend on financial planning (32%)."
3. Lack of money: "31% of women say the biggest impediment to planning for financial goals is simply not having enough disposable income to put toward them."
What does this mean? To me, it shows that what women really lack is the confidence necessary to be financially successful.
So the question becomes, if you lack confidence when it comes to money, how do you gain it?
The following are my three suggestions to counteract the "lacks" above:
1. Pick a direction: Oftentimes when we don't know enough about a topic it can seem intimidating to start learning. What if we start in the wrong place? What if we spend time and energy pursuing things that aren't that important? What if we fail?
Well, what if? And so what?
From a young age, we're told not to fail. It's drilled into us all through school. So, when it comes to learning new things as an adult, we can be frozen with fear! We're so concerned with being right that we never actually allow ourselves to grow.
Learning about money isn't brain surgery. It simply takes a little bit of confidence to start and a lot of not caring about how many times you fail. Because if you're making mistakes, you're growing and learning. It's as simple as that.
To make it simple, think in terms of the four asset classes: paper (stocks, bonds, etc.), real estate, commodities (gold, silver, oil, etc.), and business (as in owning one or investing in one).
Which one sounds interesting? Pick one, go to the library or online, and find some resources to read. If you don't like it, move on to another asset class. Dabble until you find what interests you. Then keep digging deeper. You'll find your way.
2. Make time: Of all the "lacks" above, this one frustrates me the most. Everyone has the same number of hours in a day. Those who are successful simply use those hours more wisely. No matter how busy you are, you can find time to invest in things that are important to you.
Do you have a lunch hour at work? Read up while munching on a sandwich! Do you spend your evenings watching shows on TV? Trade in that time for some quiet study time. Taking the kids to practices and events? Bring a book with you or listen to a podcast while they play.
Most women probably have way more time available than they think. It's a matter of being intentional with it. Make time to grow your financial intelligence.
3. Pay yourself first: When Robert and I were first married, we didn't have much money, but we knew we wanted to be rich! We also knew that the only way we'd get there would be by making our financial education and our investing a priority-the biggest priority, in fact.
So, each month, much to our bookkeeper's lament, we'd pay ourselves first. We did this by putting a set amount of money aside in the budget as an expense for our investing. We paid this without hesitation (most of the time) and without fail (all of the time).
But what about our bills? We paid them. Just not always on time. We got very good at negotiating with our creditors, but the one thing we never negotiated on was paying ourselves that investing expense.
The point? We made money available for our financial plans. You can too.
At the end of the day, if you practice these three things-picking a direction, making time, and paying yourself first-there's no limit to how huge your confidence can grow. And when your confidence grows, so will your wealth.