Financial literacy

Simple Steps Toward Financial Confidence

Financial insecurity and the struggle to live according to a certain standard can erode your confidence in your financial situation. In financially vulnerable households and among young adults, low financial confidence is more prevalent.

According to research by Bank of America, 51% of millennials feel behind in their overall financial situation and 33% believe their mates are better off financially, while 73% are not optimistic about their financial future.

Maybe, your regular wages cannot help you overcome that financial anxiety. Or your situation may not be so dire, but you’re tired of the mundane and want to stay rich.

Whatever your situation, we researched confident financial solutions geared towards helping you overcome your anxiety and grow your financial confidence.

What is Financial Confidence?

True financial confidence is not found in keeping your dream job, or earning a huge paycheck, or even stashing cash in your bank account. Simply, Financial Confidence can be defined as having whatever it takes to financially sustain your lifestyle despite economic downtimes.

For instance, if you can handle your financial situation comfortably after losing your job or facing an economic meltdown, then you are financially confident.

Of course, when it comes to financial confidence vs financial freedom, people often think that they have the same meaning. For instance, when your passive earnings have dropped drastically and money keeps rolling, you can say you have attained financial freedom.

But having financial confidence means that you live comfortably on your earnings regardless of what happens externally. And yes, even when your investments are not doing so well and you feel less free.

1. Change your Money mindset

Your mindset is the bedrock for any major progress that can be achieved in your life. It is critical you reshape your mindset about money and change the environment that shaped your wrong perspective about money.

For example, let’s say that tomorrow an economic recession were to occur. A person with a poor mindset would probably panic, worry about their job, and salvage most of what they have — saving mentally.

But someone with a rich mindset would think about how they can leverage the current situation to their advantage — such as learning about a shortage of rice and setting up their own supply route to provide rice to those that need them.

That’s why it’s critical to hang around other people who are on the same path as you or even way ahead of you. The more you stay around financially prudent individuals, the more your financial confidence grows.

2. Take inventory of your debts and expenses

People never take their spending habits too seriously especially when they are living on large paychecks. You don’t realize when you are accruing so much expense and potentially running into debt until it’s too late.

To remedy this, begin by taking charge of your spendings. Sit down and look at those numbers and differentiate expenses that you can’t do without from the ones that are necessary for your day-to-today living.

Of course, you may take a different approach when it comes to debt because there is good debt and there is bad debt. As a general rule, good debt facilitates a goal, like buying a house or taking out loans to attend college.

Conversely, bad debt typically doesn’t support a life goal, and it often has a high-interest rate.

To grow confidence in finance, it’s critical to develop a plan to repay your debts as soon as possible.

3. Set a Financial Goal and stick to it

Setting money goals is another confident financial solution that can be applied to more than one area of your life to help overcome those financial worries. Setting up a framework for your finances is just as important as budgeting your time socially or professionally.

It would help you closely monitor your finances and make better financial decisions.

According to research, 63 percent of people with a written financial plan report feeling financially stable, and 56 percent felt very confident about reaching their goals. On the other hand, only 17 percent of those without a financial plan felt confident about reaching their goals.

So, if you’re battling financial confidence, this simple step can be your liberation.

4. Avoid Lifestyle creep

Increased income often results in increased discretionary spending. This lifestyle creep can manifest as an ever-increasing desire for the finer things in life that leads to unending expenses that deplete your savings account.

Of course, improving your lifestyle is very important but don’t get caught up “showing off for the gram” that you get sucked into debt and financial misery.

Budgeting your expenditures can assist you in taking control of your situation.

5. Build an emergency fund

A study revealed that less than half of Americans could cover a $1,000 emergency. So, most people live their lives in fear of having an emergency that could potentially put them in a state of bankruptcy. Setting up an emergency fund helps reduce that worry so that you can channel your mind to improving your lifestyle and social wellbeing.

6. Consult a financial guru

Financial confidence doesn’t mean you must understand everything about money. As a matter of fact, most financially confident persons hire financial experts to help them manage their money.

Maybe you want to invest your money to increase your income streams and become rich. It’s always a no-brainer to delegate that task to an advisor with confident financial services. You don’t have to put yourself through that rigor. And you are confident that your investment is in the competent hands of an expert with proven financial track record.

Bottom Line

Just like other skills, financial confidence can be attained. Although you can’t become one overnight, small proactive steps and progressive changes are the secrets to maintaining control over your future financial stability.

Following these steps to achieve your financial goals yields results that boost your courage, and help you begin to feel confident about your lifestyle.


Olha graduated from Brigham Young University - Idaho. She joined PocketGuard in 2022 as a digital marketing manager with a strong background in product marketing. Olha is focused on brand awareness ...

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