Many People Have Financial Impostor Syndrome, Study Finds — 3 Ways To Combat It
Written by
Tina Nazerian
Edited by
Cory Dudak
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Financial impostor syndrome is something many people experience. A recent study by KeyBank found that a “staggering 50% of Americans report feeling financially stressed based on their current situations. However, beneath this stress lies resilience — with 45% of respondents confident they could manage a $2,000 unexpected expense and 34% confident they could come up with $5,000 if a need arose.”
Additionally, the study revealed, “While 68% of Americans say they need more money to live comfortably, nearly half (45%) are less than $2,500 per month away from reaching that comfort goal.” And when it comes to some major, regular expenses, 87% are “confident they can pay their rent/mortgages each month and 70% are confident they can pay off their credit cards every month.”
The Causes of Financial Impostor Syndrome
According to the KeyBank study, financial imposter syndrome is “the self-doubt many people feel when it comes to their financial skills and money moves versus the actual reality of their financial picture.”
Stephanie Zepeda, who has a doctorate of philosophy (Ph.D) in Marriage & Family Therapy and provides financial therapy to individuals and couples in Texas, pointed to “another, more pithy definition” of financial impostor syndrome that appeared in a 2020 New York Times article: “Despite making a living wage, you still feel poor.”
In Zepeda’s view, both definitions are “saying the same thing.” However, she thinks the definition in the New York Times “puts it in succinct terms.” She believes that there can be a few causes of financial impostor syndrome.
For one, she explained, “People might be holding a high standard for themselves to feel like they have ‘made it’ — they want to be living [the lives of their] hopes and dreams.”
Then there’s the issue of not having data.
“I always tell my clients, ‘The financially anxious heart is soothed by data,'” Zepeda said. “I would definitely frame financial impostor syndrome as a subcategory of financial anxiety. And part of people not being able to understand their relative position with their expenses and financial safety is often a lack of understanding the flow of money throughout their household.”
Zepeda also pointed to “inherited money lessons” as a reason that could be behind financial impostor syndrome.
“One conversation that I often have with my clients is about the money lessons that they inherited from their upbringing — and not just from their family of origin, from the media/television/films they consumed, from seeing their friends’ lifestyles, from spiritual messaging, etc.,” she explained.
Two examples of inherited money lessons that could lead to financial impostor syndrome, according to Zepeda, are “Money is the root of all evil” and “Money doesn’t grow on trees.”
How To Combat Financial Impostor Syndrome
Zepeda recommended three key ways people can combat financial impostor syndrome. Each way tackles one of the three causes of financial impostor syndrome Zepeda identified.
Know Your Needs and Wants
First, she noted that you should divide your “comfort goals” from your “hopes and dreams goals.” She advised discussing your hopes and dreams with your partner or “if you are single, a trusted friend.”
She encouraged writing down your goals in detail. “Once you have defined and spoken about these hopes and dreams, you can differentiate them concretely from each other. This can let people hold that ambivalent space of feeling confident about their comfort goals, while still working to achieve their hopes and dreams goals.”
Make an Annual Budget
As for the data element, Zepeda urged putting together a “prospective, annual budget.” She explained that people usually budget monthly; however, an annual prospective budget can give you an “accurate picture of the flow of income and expenses throughout the household.”
An annual prospective budget, she said, “can help people to see their financial situation far more clearly than a monthly budget ever can do.”
According to Zepeda, you can create one even if it’s no longer the beginning of the year. “Just start with your current month and then plan out the data through December.”
Examine Your Money Lessons
Finally, Zepeda said you should “reflect on what your inherited money lessons are.” Then, determine the ones you want to stick with, modify and toss.
“Taking stock of the money lessons we tell ourselves not only helps us in our current life, but also in being intentional about what money lessons we pass on to the next generation,” she said.
Why It’s Important To Combat Financial Impostor Syndrome
According to Zepeda, it’s important to combat financial impostor syndrome because “if people live in [the] constant feelings of financial inadequacy that financial impostor syndrome brings, they may be not only living with undue financial anxiety, but also may be passing on some particularly frightening money lessons to those they love. Addressing this can help people live more intentionally.”
One thing Zepeda wishes more people understood about the relationship between emotions and finances?
“So many of our money ideas are generated from fear. To quote the book ‘Pollyanna,’ ‘When you look for the bad, expecting it, you will get it. When you know you will find the good — you will get that.’ If our spending and saving habits are guided by fear rather than by hope, we are doomed to constantly being let down in our financial lives.”
However, she clarified that she doesn’t think disregarding financial obligations is the answer, because that would constitute “another form of manifestation of fear-based behavior.” She added that in financial therapy, “we call such fear-based behavior ‘financial avoidance.'”
Zepeda advocates for a different approach.
“Being led by hope in financial decisions means prudently, accurately judging your responsibilities so that you can see your possibilities,” Zepeda said.
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