Reading Time: 3 minutes – Posted: August 2020
By definition, confidence is “a feeling or consciousness of one's powers or of reliance on one's circumstances.” People tend to exhibit confidence in their own abilities based on many factors, including knowledge and experience. Sometimes confidence is felt and observed in the moment, while at others it is seen over time through positive results.
Financial confidence, at its core, can be summarized as the capability to recognize and act upon one’s strengths and areas for improvement when managing their own money. Like many aspects of their lives, people differ in their confidence levels when it comes to personal finances and money management.
Wherever you are in your financial journey, use these tips to forge a path to improve confidence in your money management skills, make sound financial decisions, and create and execute a proactive financial plan.
Learn About Personal Finance Strategies
While some people prefer to dive in on a subject and do their own research, others want step-by-step guidance to lead them in the right direction. Whatever your learning preferences might be, developing or increasing your awareness of personal finance terms, concepts and strategies goes a long way toward building confidence in managing your money.
Use Financial Education Tools at Your Disposal
Whichever learning method you prefer, there are great tools to use, from blogs and expert-authored articles to online financial education programs that guide users through a variety of financial topics, including key financial concepts, building a spending and savings plan, preparing for large purchases and planning for retirement.
Set an Achievable Financial Goal
Now that you have a basic understanding of managing your finances, start taking steps to achieve one financial goal that is important to you. It’s easy to be tempted to jump in too quickly, setting multiple financial goals simultaneously that prove unattainable and could lead to you giving up or not sticking to a long-range plan.
Set Up Passive Savings
Building financial confidence is incremental and takes time. It also builds upon itself and grows with each victory you achieve. Try setting one goal to start, such as building an emergency savings. A great way to start is to open and link a savings account with your checking account and set up an automatic transfer for a specified dollar amount each month (or each paycheck) from checking to savings.
Proactively Add to Your Savings, and Your Confidence
At the end of each month, check your finances to see if your budget allows you to either increase your automatic transfer amounts, or if you have a surplus at any given time, make a one-time transfer to savings. As you see your savings grow, confidence that you can accomplish your goal will also grow.
Apply What You’ve Learned
With your first goal heading toward success, apply what you’ve learned to your next money management goal. Want to be a homeowner? Pay off student debt faster? Contribute to your company sponsored 401k? These are all achievable goals. Build on good budgeting habits you’ve established to prioritize your next personal finance goal and rely on your increasing confidence to keep making money decisions that best fit your near- and- long term needs.
About the Author - Robert Juliano
Bob Juliano is Vice President, Director of Corporate Giving & Financial Literacy at WSFS Bank. He is a financial education expert for the Bank and has taught K-12 financial literacy to thousands of children.