Written by: Fiona Smith, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Everyone wants to become financially successful. But now, it’s arguably more difficult than ever before. High inflation, thousands of layoffs, and stagnating wages make it more difficult than ever to boost financial confidence.
If you want to discover how to boost your financial confidence, then keep reading because I’m going to show you exactly how.
Let’s dive right in.
What is Financial Confidence?
Financial confidence is the empowering feeling you get when you know you have full control over your own financial picture. Financial confidence is when you know you can successfully manage your money.
Why is Financial Confidence Important?
Building financial confidence is critical if you want to accomplish your long-term goals and become financially independent.
However, to become financially confident, you need to become financially literate and gain access to the right financial products, services, and human capital (like financial advisors) that can guide you in the right direction.
How to Improve Your Financial Confidence
Here’s how to immediately improve your financial confidence.
1. Know Your Money Mindset
One of the best ways to boost your financial confidence is to understand yourself and specifically, your money mindset.
In general, there are 2 common money mindsets:
Scarcity mindset
Abundance mindset
The scarcity mindset connects well with the saying that “money doesn’t grow on trees.”
The abundance mindset is one where you never stop looking for money making opportunities because you know these opportunities will be everywhere.
If you feel like you’re following the scarcity mindset, don’t worry: You are not alone – and it’s no wonder you’re not financially confident!
To change your money mindset, it’s essential to start altering your views on money – perhaps by meditating, reading more books, or even talking to licensed financial professionals.
2. Take Baby Steps
When you set out on your financial journey, it’s important to remember that you can’t build Rome in a single day.
It’s just not possible.
Instead, you should focus on the small and daily improvements that you’re doing.
In the end, it’s the consistent action and the baby steps that will get you to your destination – whether that’s financial independence, paying off a debt, etc.
3. Build a Solid Financial Plan
If you’re struggling with financial confidence, then start building a solid financial plan that can guide you through the curveballs that life can and likely will throw your way.
Having a written and solid financial plan can literally help you feel more stable and more confident about where you are currently and where you are headed.
Just keep in mind that a financial plan can and often will change as your life changes.
That’s why it should be a priority to review your financial plan with a financial professional at least once a year.
4. Become Financially Literate
One of the absolute best finance tips to boost your financial confidence is to educate yourself about money management.
In fact, the more financially literate you are, the more confident you’ll become about money.
The good news is that educating yourself about money management really doesn’t take too much money.
In fact, you can access free resources all over the web, on YouTube, or even via podcasts.
And remember that investing in yourself is one of the best appreciating assets.
Nowadays, you don’t have to get a costly degree to pay for your financial education; the information is all online.
5. Build Passive Income Streams
If you really want to become financially independent and boost your financial confidence, then you need to look into building income through passive income apps.
In fact, the average millionaire is known to have 7 income streams – many of which are completely passive.
The term passive income essentially means that you can make money while you sleep.
Some examples of income streams include:
Interest
Royalties
Dividends
Rental income
Affiliate income
Recurring income
Capital gains income
There are literally thousands of ways for you to build passive income streams, so you just have to do your research and figure out which way is best suited for you.
For example, many online entrepreneurs build up their own blogs or even YouTube channels, which they utilize to earn passive income.
Their websites can earn income for literally years down the road, without them ever having to type another word.
The downside, however, is that these blogging endeavors typically take a lot of time upfront to build.
6. Don’t Be Afraid to Talk Money
Money, many times, is considered a taboo subject.
As a taboo topic, people often don’t feel comfortable talking about money matters – but that shouldn’t be the case!
In fact, the more comfortable you feel talking about money, the more knowledgeable you’ll become about money… and likely, the more financially literate you’ll also become!
In fact, talking about money with trusted friends, for example, could even help you pick up some new ideas on how others might be budgeting or saving money.
7. Get an Expert’s Opinion
When looking to boost your financial confidence, don’t always rely on yourself, either.
It’s also important to accept and know your limitations.
That’s why it’s also a good idea to consider an expert’s opinion on your current financial picture and on what you should do to achieve your future financial goals.
For example, you may want to connect with a wealth advisor who is a Certified Financial Planner (CFP(r)), or a Chartered Financial Analyst (CFA).
Either way, it’s very important that you ask your wealth advisor if they are fiduciaries.
Fiduciaries are people who are required, by law, to do what is in your best interest (so they can’t sell you sleazy products where they would get massive commissions, for example).
8. Have a Solid Emergency Savings Fund
One of the best money hacks to boost your financial confidence is building an emergency savings fund.
An emergency savings fund is a liquid account that is easily accessible for you in case of emergencies.
Typically, you’ll want to fund your emergency savings account with about 3 to 6 months’ worth of living expenses, depending on your job and industry type, your health profile, and whether you have other people depending on you for income.
Having an emergency savings fund on stand-by is one of the most helpful things you can do because it also alleviates mental stress when it comes to financial matters.
9. Build & Stick to a Budget
One of the most empowering ways to build financial confidence is developing and sticking to a budget.
While many might groan at the prospect of the “b-word,” a budget is actually a really cool tool that you can use to improve your financial life.
The very first thing you should do when budgeting is to carefully track every penny earned and every penny spent for at least 3 months.
The 3-month marker gives you some sense of the “average” income and the “average” expenses.
Once you have those averages nailed down, it’s time to figure out where you can cut the excess spending.
Typically, you’ll do this by categorizing your expenses as needs, wants, and wishes.
Anything that’s not categorized as a “need,” should be eliminated ASAP.
Once you cut out those excess categories, you can save and invest that money.
10. Invest Automatically
When people hear the word “invest,” many times they think that they’ll need to monitor the markets daily, make quick decisions about buying or selling stocks, and become the world’s best day trader.
However, that’s not the case.
If you want to boost your financial confidence, then all you have to do is simply invest automatically.
Even if you “just” invest $100, that’s better than not investing at all.
In fact, when you start investing in stocks automatically, it’s like your investments are “out of sight, out of mind,” so you can focus on other things like making more money, spending time with your family, and making lasting memories.
11. Build a Side Hustle
If you want to get rich and boost your financial confidence, then you should consider building a side hustle as well.
In fact, side hustles can often turn into your main hustle, making you more money than your full-time job, for instance.
The great thing about side hustles is that you can make money virtually any single way:
You can write online
You can resell products
You can write your own ebook
The opportunities are literally unlimited.
Even if you make just $100 extra per month from your side hustle, that’s an extra $1,200 per year, which should definitely boost your financial confidence in the long run.
12. Live Frugally
If you’re looking to build your financial confidence and live without financial worry, then another strategy could simply be to live frugally.
Frugal living means that you really try to spare every last cent – but without becoming miserly.
There is, in fact, a difference between the terms frugal and stingy.
Frugal is simply a way of life where you’re still enjoying your lifestyle just without some of the luxuries (like expensive vacations, new cars, new clothing, etc.).
Stingy, on the other hand, is a negative term that is used to describe someone who is a penny-pinching person (in a bad way!).
Frugal living typically means living with a purpose – such as financial freedom.
You can live frugally by coming up with creative ways to cut costs (like instead of buying new hand soap for $10, consider mixing dish soap and water together, and voila! You have your own hand soap!).
How do You Build Your Financial Confidence?
Building your financial confidence comes down to your financial literacy. That’s why you should try to learn something new about money management for at least 10 minutes a day by reading a book, listening to a podcast, or talking to a financial advisor.
Closing Thoughts
In the end, boosting financial confidence really does start with a plan in place.
Now that you’ve read some of the best ways to build your financial confidence, it’s time to implement these steps.
One way to do so is to simply pick a step and start pursuing it (like starting a budget or finding a financial advisor who is a fiduciary).
And remember, in the end, becoming financially successful is all about the small, daily habits that you’ve put in place.
Fiona Smith, Executive Contributor Brainz Magazine
Fiona Smith is the founder of The Millennial Money Woman. She holds her Master of Science Degree in Personal Financial Planning and has co-founded a local non-profit community teaching financial literacy. She is the author of the personal finance book How to Get Rich from Nothing and her work is featured on Forbes, Oberlo, and FinCon.
