How can I build my financial confidence?
Having a sense of confidence can be described as feeling that you have power or relying on the circumstances around you. Financial confidence then would come from the knowledge that you are in control of your money. By that I mean, you believe that you are capable of managing your finances well when you are financially confident.
Financial freedom, as the ultimate economic utopia wherein which, at any given point, one’s passive income exceeds personal expenses. At this stage, the financially free individual is at liberty to use their time and space as they please, without a worry about any money issues. However, with the advent of Covid 19 coupled with ongoing technological advancements, it has become apparent that changes in human circumstances are happening faster than ever before. In this climate then, it becomes apparent that financial freedom may be noble idea, however, a very fickle one too.
It may seem like you are free when your investments are doing well, as income keeps rolling in. Then, suddenly, you find yourself ‘less free’ when your investments don’t perform well. So, in essence, you may be financially free today, but that does not necessarily mean the case will be the same tomorrow.
This is where financial confidence, as the unwavering contingency for weathering fluctuating economic epochs, comes in. Arguably the only true freedom, financial confidence gives you peace of mind, regardless of the economy or your business, aren’t dependent on what happens to your business or portfolio. The confidence you have in your ability to recover even if you lose everything today gives you the confidence to keep on trying.
Here are some tips to help you grow your financial confidence and get closer to financial freedom.
At the core of financial confidence is financial literacy, or an understanding of financial concepts and skills. Your financial choices become more confident when you understand finances. You get to manage your money without feeling like you’re guessing. Concentrate on what matters to you. The internet is full of information about investments, savings accounts, and more. Your desire to learn everything may lead you to want to take everything on at once. However, you should aim at focusing on the essentials instead.
Believe in yourself
You’re actually good with money, start believing that. In order to harness the necessary skills to improve your financial wellbeing, it is imperative that you believe you have what it takes. Also, being confident doesn’t always mean you know everything. Understand that it’s okay to not have all the answers.
Create a financial plan
Research shows that people who have a written financial plan end up feeling more financially stable and confident with reaching their goals. Creating a sound financial plan can do wonders for building your financial confidence. This is where the old adage, “if you fail to plan, you plan to fail fits perfectly”.
Build Your Emergency Fund
If there is anything that we learned from the Covid 19 pandemic it is that life can be very unpredictable, and that the only constant in life is change. The truth is, pandemic or no pandemic, unanticipated events happen all the time. This is something we have no control over. We can however financially plan for these events even so that they don’t take us by surprise and leave us bankrupt. This is why it is imperative for your financial confidence to always have an emergency fund ready to cushion the financial blow of life’s unexpected money curveballs. Building this emergency fund may seem daunting and futile in the beginning, but slow and steady wins the rains and you will thank yourself later.
Take risks and invest
Every good investor has to be willing to invest in markets and to fail. You’re bound to run to a couple of sour investments, but if you have a diversified portfolio, you will live to reap the rewards. You will gain confidence by find the answers to your questions, using this knowledge to grow and also sharing it with others. It will do you a lot of good to start getting comfortable with a few of those ‘uncomfortable; money choices.