6 Steps You Should Take To Increase Your Financial Confidence
Women tend to be less financially literate than men, but this seems to be due to a lack of confidence rather than a lack of knowledge. A survey conducted by the Global Financial Literacy Excellence Center found that “women tend to disproportionately respond ‘do not know’ to questions measuring financial knowledge, but when this response option is unavailable, they often choose the correct answer. […] About one-third of the financial literacy gender gap can be explained by women’s lower confidence levels.”
It’s time for women to stop letting their self-doubt get in the way of their financial success. In today’s “Financially Savvy Female” column, we’re chatting with Charlotte Cowan Geletka, CFP, managing partner at Silver Penny Financial Planning, about the steps you can take to increase your financial confidence.
Keep Up With the Latest: Sign Up for The Financially Savvy Female Newsletter
Stay in the Know: Read More From the Financially Savvy Female
Step 1: Know That You’re Good at Money
Start by getting into the right mindset.
“Anytime you engage with something financial, whether it’s going to the bank or getting a mortgage or opening up a 401(k), the first thing you need to do is tell yourself, ‘I’m good at this,’ whether you are or not,” Geletka said. “Mentally, you have to flip the script and realize that money’s part of your personal power, so if you shut off thinking about it, then you’re automatically going into it with a negative mindset. You have to tell yourself that you’re good with money.”
Step 2: Face Your Finances Head On
You can’t feel confident about your finances if you don’t have a clear picture of where you stand financially.
“Financial statements are very confusing, but the number one thing you have to do to increase your financial confidence is to face your finances and know what you’re dealing with,” Geletka said. “You have to take inventory of what you have.”
This is especially true if you are a woman in transition.
“If you’ve just faced divorce or you’ve just become financially independent, you need to be having financial check-ins with yourself frequently,” Geletka said. “At a minimum, you need to be checking in once a year on your debt, your savings, your net worth and your goals.”
Helpful: Budgeting Tips for Single Moms
Step 3: Ask Questions
“If you are looking at a statement and it looks like Greek, find that 800 number, call that number and keep hitting ‘0’ and ask, ‘What is this?'” Geletka said. “I deal with all kinds of people that don’t have an understanding because they’re too afraid to ask. It’s your money. I see [this fear] in people that have low resources to multi-million dollars, and I have to tell them, ‘Remember, it is your money.’ It’s your money when you walk into the wealth manager’s [office] or wherever. They should be your advocate, but it’s your money.”
Don’t be afraid to ask the most basic questions. You need to understand exactly what you’re dealing with, so you should ask questions until you feel you know what everything on your financial statements means.
Step 4: Think of Money as a Resource
“Money” can be a dirty word to many women. We don’t like talking about it, and thinking about it can be a source of stress — but we shouldn’t let money have this power over us.
“Money has to be thought of as a resource,” Geletka said. “You have to approach it from that standpoint. A lot of people have a money story or a money fear or a lack of confidence. It is money, it is a resource, so you should not be scared of it or push it away.”
Step 5: Understand the Cost of Credit
Many of us have been conditioned to think that having debt is OK, but it can be a major roadblock to achieving financial freedom and can keep us in a cycle where we don’t feel good about our finances.
“The consumer credit industry is genius at marketing itself to you as something different than what it is,” Geletka said. “You need to look not at the monthly payment, but at the cost of using credit. When you purchase a car, they’re going to say how much you pay per month. You should ask the cost of borrowing the money.”
Step 6: Seek Out Resources That Can Help You Continue Building Your Confidence
“[Seek out] a financial planner who can act as a financial coach,” Geletka said. “There are all types of models of [financial advising] out there, so you don’t have to have a ton of money to walk in the door. A good financial advisor will set you on a really good financial roadmap that gives you actionable steps and when they should happen.”
You should also seek out resources to improve your financial literacy on your own.
“Check reputable sources for articles — Business Insider, Wall Street Journal, etc.,” Geletka said. “Pick a topic that you don’t know a lot about and cross-check that one topic. If you’re hearing the same thing across sources, that’s a good indication that that’s a good idea.”
GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the reasons behind these inequities and provide solutions to change them. We believe financial equality begins with financial literacy, so we’re providing tools and tips for women, by women to take control of their money and help them live a richer life.
More From GOBankingRates