Financial Freedom is a Myth! Financial Confidence is the Reality!!

What Is Financial Confidence?

Financial confidence is the ability to make everything back if you were to suddenly lose it. True financial confidence means that you are not bound by any job, country, or material possessions. Your skills and abilities create financial confidence, because no one can take them away from you.

You see, financial confidence is exactly what it sounds like. It means you have the confidence to be financially independent, no matter what situation you find yourself in.

Financial confidence isn’t about having a steady job, getting a large paycheck every month or having a ton of money saved up in the bank. It’s about having the skills to financially sustain your lifestyle despite economic times.

When economic times are bad – when a recession hits, or there’s a depression, or hyperinflation, a job won’t provide financial confidence. In those uncertain times, companies look to lay off their most expensive employees. And if you’re on the top of their payroll list, your safe secure job that you thought was keeping you financially stable, is now your worst nightmare come true.

The same is true in times of a crisis such as a recession or depression. All your money that you saved up over the years, becomes worthless in an instant. Take for example the country of Zimbabwe, where hyperinflation caused it’s currency to be worthless – 100 trillion Zimbabwe dollars is only worth 40 cents in the US.

Why Financial Confidence Matters

Your relationship with money will impact how you behave with your money. That means that the more confident you feel about managing your money, the better you’ll do so. Here are some things I know for sure:

Emotions play a much bigger role in money than you might think.
Our family history impacts how we behave with money.
The way we think about money determines how we will act with our money.
Sometimes, we’re the ones holding ourselves back.
If you don’t think you can do it, you won’t try to do it.
If you think you’ll always be “bad” with money, you’ll keep making the same bad decisions.
Many of us don’t ask for what we want because we don’t believe we deserve it.
Many of us get stuck in the cycle of debt because we don’t think we deserve better.
We feel isolated from others because we think we are alone in our financial struggles.

How to Build Your Money Confidence

Just because you don’t currently feel confident about your money management skills doesn’t mean you can’t change that. I’m a big believer in changing your mindset in order to make long-lasting changes in your life. It’s a process that doesn’t happen overnight, but it has to be deliberate and consistent. Below are some simple ways and some not-so-easy ways to improve your financial confidence:

Unless you were surrounded by financially successful people while growing up, chances are you do not have the skills or mindset to achieve it. Here are 15 tips from money experts to help you grow your financial confidence and get closer to financial freedom.

Choose your environment wisely

A person’s environment is the biggest factor that determines whether or not they’ll become successful. If you grew up around poor people, you will most likely end up poor. If you grew up around rich people, you will most likely end up rich as well. It’s the Law of Environmental Exposure, which states that your actions and behaviour are a byproduct of the environment you are in most. This is why children of poor parents end up living a similar lifestyle, such as children in third world countries who have no choice. The only way for them to change their future, is to change their environment.

The five closest people you hang out with, determine your future. Think about the five people you are closest with, and describe their lifestyle. If it’s not one you want to have as well, then you need to change your environment.

Hang around with other people who are looking to achieve the same things you are.. Attend seminars, networking events and entrepreneurship groups. Surround yourselves with people who are on the same path as you, to change your environment into one that is focused on success.

Rich mindset.

Your mindset is another one of the biggest factors that will influence your success and financial confidence.

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 the most of what they have – a 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. Instead of running around with his head cut off, the person with the rich mindset finds ways to turn disasters into opportunities, through their ability to see things that other people don’t. This is possible only with a rich mindset.

Develop skills

Skills are what allow you to be financially confident. With skills you can turn a recession into an opportunity. With skills you can make a living and even become wealthy no matter what part of the world you find yourself in. With skills you can develop the confidence to stand on your own wallet, because skills are something that you can never lose.

You can lose a high paying job. You can lose your house. You can lose your country. But if you have the skills to make it all back, you will never have to worry. That is what financial confidence is – having the mindset, skills, and ability to become self sustaining no matter what conditions you are in.

Ask yourself: If you were to lose everything you had today, would you be able to make it all back? Your answer determines whether or not you have true financial confidence.

Beating The Odds Virtually Together

Look at your overall financial picture rather than just your current snapshot. Don’t think about only what you’re earning at age 30 when you may be having kids, but how your salary will grow over time. If you do choose to take a career break, think about how you can stay current by volunteering or getting involved in startup projects. This will help you to keep relevant if you decide to opt back in.

Take risks.

“You need to be willing to invest in markets and to fail, You’re going to make some bad investments, but if you have a diversified portfolio it should pay off in the long term.”

When it comes to finances, the best confidence is asking what you don’t know, getting smarter, and then sharing it with others. Let’s all get comfortable with being a little uncomfortable and talking about money, power and finances. And by the way, you can be nice too.

The most important thing is getting started. “It’s never too late to put a sound investment strategy in place,” says Miler. “If you start to more mindfully manage your money even at 40 or 45 years old, it will have a positive effect on your retirement at 65 or 70.”

Forgive Yourself for Past Mistakes

One of the biggest reasons many of us feel like crap about our money is because of past mistakes we’ve made. Maybe it’s getting into debt or blowing our savings. But here’s the thing: we all make mistakes. That doesn’t mean we have to suffer for them forever. In fact, the sooner you forgive yourself, the sooner you can move forward.

You can’t change the past. No matter how much you try to punish yourself for your past mistakes they still won’t go away. Dwelling on them only causes you to suffer and keeps you stuck in the past. Accept that you won’t be able to change the past so that you can leave it behind and move forward.

Focus on future actions. The more you focus on the future instead of the past, the more you’ll actually be able to take action to move yourself forward. Instead of wondering what you could have done differently in the past, focus on what you can do differently in the future.

Get to Know Your Numbers

Knowledge is power. And that is just as true when it comes to your money.

Look at all your accounts. You have to know where you’re starting from in order to move forward and make changes. So a good place to start is to look at all of your financial accounts to understand how much money you have and how much you owe.

Understand your income. If you know how much money is coming in every week, you’ll be more in control of how you’re spending it. Look at your paychecks and figure out what your monthly pay is. If you have inconsistent income, or if you’re paid hourly, figure out your average monthly income.

Get clear on your expenses. Look at how much money is going out every month. The first step is understanding your fixed expenses, which are the things you always have to pay no matter what (rent, student loans, utilities, etc). That is your baseline spending number. From there, figure out how much you’re spending on everything else (food, transportation, entertainment). Mint will help you with this task as well. From there, you’ll have more control over whether or not you need to cut back on your spending to fit within your income.

Find the Easy Solutions

Not all financial decisions need to be difficult. Your money mindset can improve just from taking small, easy steps. Finding those small solutions will help encourage you to keep taking more steps.

1. Cancel unused subscriptions.

Subscriptions don’t always cost very much alone, but they can certainly add up over time. If you have subscriptions or memberships that you are not using or don’t use very often, consider canceling them. This will save you lots of money over time. If you need help figuring out what you’re subscribed to, sign up for ClarityMoney. Not only is it a budgeting app, but it will point out what your recurring costs are and help you to cancel subscriptions you aren’t using.

2. Delete tempting apps.

The internet is a great thing, but it also has made it way too easy for us to spend money. If you know that you tend to spend more than you can afford because it’s so easy, remove the temptation. Delete your most-used apps, like Amazon Prime or Sephora. If you force yourself to get on your laptop and log in so that you can spend money, you might second guess your purchase. Related, remove your credit card information from your online shops. If you have to type in your card every time you want to buy something, you might buy less!

3. Leave your cards at home.

This one can be tough for many people, but sometimes you just need to remove the ability to spend money. If you’re just going to work and coming back home, leave your credit cards or debit cards at home. If you don’t have them with you, you can’t buy lunch instead of eating your leftovers. You can’t stop at Target on your way home instead of just going home and making dinner. It’s amazing how much money you can save when you’re not able to actually spend it!

4. Automate, Automate, Automate

Automating your finances will make you confident that the right things are happening. Put your bills on autopay. This is especially important if you know that you are forgetful. Set up autopay on all of your bills so that you never miss one. This will protect you from late fees and other penalties

5. Direct deposit your savings.

The easiest way to save money is to set up direct deposit. This is vital when it comes to retirement savings, but it is also helpful for your other savings goals. Set it up so that your employer is directly depositing a certain amount from your paycheck into a savings account. You’d be surprised how quickly this will add up!

6. Create a spending account.

A great way to make sure you aren’t overspending is to create a checking account that is purely for your flex spending. This means you’d have two checking accounts: one for bills and one for spending. You would calculate exactly how much needs to go into your bills account every month so that you always have enough to cover the necessities. And then the rest (that isn’t going into savings) would go into a spending account. This protects you from overdrafting your bills account and it will also always be clear exactly how much you have left to spend for the month.

Celebrate Your Wins, Big and Small

If you’re like me, you tend to ignore the small wins and only focus on the big ones. But the problem with that is that big wins don’t always come along everyday. And our small wins are just important, and celebrating them will make us feel better about ourselves and motivate us to keep going.

Set interim milestones:

When you are trying to reach big goals, like paying off a debt or hitting a big savings number, the goals can feel daunting. Thinking only about the big number can decrease your motivation. That’s why it’s important to set smaller, interim milestones so that you can notice and celebrate when you’ve hit them. Allowing yourself to celebrate your wins, no matter how small, more often, will keep you motivated and feeling better about your progress.

Track your progress:

Creating a way to track your progress as you are working towards a goal will not only keep your mind on the goal at hand, but it will also motivate you to keep going. This can be a digital or physical reminder; it depends on what will be the most useful to you.

Treat yourself well:

Even though I think the “treat yourself” mentality makes people spend more than they can afford sometimes, I do think it’s important to rewards yourself for reaching your goals. Choose a small reward to gift to yourself whenever you reach a milestone along the way to your big goals. This will allow you to add a fun element to the long road towards financial health.

Talk About Money

I’m a huge proponent of talking about more money more often. The more we talk about it, the less taboo it will become and the less alone we will all feel. And there are still ways to do this even if talking about money makes you feel uncomfortable.

If you can’t afford to go out with your friends, be honest with them about your reasons. Tell them that you’re on a strict budget and you need to be mindful of how you’re spending your money. Tell them if you’re paying off debt or if you’re saving up for something. You might inspire them or gain a new accountability partner.

The moral of this article is that knowledge is power. Your skills and abilities create financial confidence, because no one can take them away from you. The more you understand about your own finances, the more in control you will feel. That control will then lead to confidence. You don’t have to become a completely different person in order to feel more confident about your money, you just have to start implementing small changes over time.

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