Melinda Perez, a financial educator, still remembers the first time she felt financially confident. She had recently started investing money outside of her employer-sponsored retirement account because she was finally earning more than she spent. \u201cIt was exciting because for once, I had what felt like extra money,\u201d recalls Perez, who lives in San Antonio, Texas.<\/p>\n
Financial confidence, or the belief in one\u2019s money-related abilities, might not come up as much as\u00a0financial literacy\u00a0\u2014 especially in April, Financial Literacy Month \u2014 but money experts say it\u2019s often the hidden ingredient behind savvy money decisions. \u201cIf there\u2019s no financial confidence, there is no willpower to succeed. We translate that to financial self-efficacy,\u201d says Perez, who also studies financial confidence as part of her research as a doctoral candidate in organizational leadership.<\/p>\n
But confidence with money can be hard to come by. According to a NerdWallet survey in January, three quarters of Americans say they do not feel confident about their personal finances for 2023, and many of them cite the uncertain U.S. economy.<\/p>\n
There are, however, ways to boost your financial confidence. Here\u2019s how to get started:<\/p>\n
Learning essential lessons around budgeting, saving and investing helps boost financial literacy, Perez says, which can positively impact actions. \u201cTo increase financial confidence, we need to increase education, so you know what tools you need,\u201d she adds.<\/p>\n
Those seeking financial education should start with local organizations and community groups that provide information for free, she adds. Finding financial literacy-focused groups on Facebook or searching \u201cfinancial education resources\u201d for your area can lead to helpful resources. The U.S. government\u2019s Office of the Comptroller of the Currency also offers a helpful\u00a0Financial Literacy Resource Directory.<\/p>\n
\u201cFind your community that talks about finances in a nonjudgmental way,\u201d so you have a safe place to ask questions \u2014 that community might include friends and social media groups, Perez says.<\/p>\n
Also see:<\/strong> \u2018Cash is the cool kid on the block\u2019: High-yield savings accounts, Treasury bills, money market funds, and CDs \u2014 here\u2019s where your cash can earn up to 4.5%<\/p>\n Your financial institution can also help, says Jennifer White, senior director of banking and payments intelligence at J.D. Power, a consumer research company. Banks and credit unions often provide online tools to help customers visualize their cash flow and see how they can improve their savings and credit.<\/p>\n That kind of support is good for consumer confidence and business at the bank. \u201cOnce customers feel supported, they are more likely to be loyal when they open up their next account, and given the chase for deposits today, that stickiness is something banks are paying close attention to,\u201d White says.<\/p>\n Also on MarketWatch:<\/strong> This woman was told her mortgage was paid off: 10 years later, she received a foreclosure notice in the mail. She decided to fight.<\/p>\n Confidence plays a big role in day-to-day money and debt management, says Lucy Delgadillo, professor of family finances at Utah State University\u2019s College of Agriculture and Applied Sciences. But creating positive outcomes depends on having the right amount of it.<\/p>\n \u201cWhen you have overconfidence and low knowledge, that\u2019s the worst situation. You\u2019re more likely to get into high-risk behaviors such as overextending credit and overly risky investing,\u201d says Delgadillo, who researches financial confidence.<\/p>\n She encourages people to reflect on their own levels of confidence and knowledge and to tread carefully when there is a mismatch. \u201cIt can motivate you to investigate and get the information you don\u2019t have available at that moment. For example, to find out the\u00a0difference between a stock and a bond\u00a0and to fill in the gaps in knowledge you might have,\u201d she says.<\/p>\n Overconfidence can originate from a bad source of information, like a misinformed social media influencer. \u201cWith social media, you learn so much more, but that doesn\u2019t mean you learn the whole picture,\u201d Perez says. She recommends checking information gleaned from social media with other sources before acting on it, especially when it comes to investing or trendy topics like cryptocurrency.<\/p>\n White also notes that many Americans struggle with basic financial literacy around core topics like\u00a0compounding interest\u00a0and investing risk. \u201cThere\u2019s a gap between what people think they know and what they actually know,\u201d she says.<\/p>\n Be sure to read:<\/strong> \u2018Poor people are not stupid\u2019: I grew up in poverty, earned $14 an hour, and inherited $150,000. Here\u2019s what I have learned from my windfall.<\/p>\n Like Perez opening up her first investment accounts, heightened confidence can help lead to smarter money decisions. \u201cIt\u2019s like an athlete practicing and knowing everything about a sport. Once you have that knowledge, you become a better participant,\u201d says Clark Kendall, certified financial planner and CEO of Kendall Capital in Rockville, Maryland.<\/p>\nWatch out for overconfidence<\/strong><\/h2>\n
Continue to learn and improve<\/strong><\/h2>\n