Although they say money can’t bring you happiness, it sure can give you confidence and peace of mind that you have a roof over your head and food on the table for the next several days. Having financial self-esteem is key to enjoying a financially stable life. Low self-esteem when it comes to managing your personal finances can lead to poor decisions, eventually causing you to shore up debt, lose investments, and miss lucrative opportunities. Luckily, financial self-esteem isn’t something people are naturally born with. Here are eight ways to build it up:
Know Your Current Financial Stature
Knowing where you stand financially will give you an idea of whether or not you should be confident about your finances. Someone with a million dollar net worth will naturally have more financial self-esteem than someone with $100 to his/her name. Identify and write all your monthly income and expenses in a list. This will serve as a baseline for determining whether or not you are financially secure.
Practice Sound Financial Habits
The financial habits you implement every day is where you draw financial self-esteem from. If you spend your week buying overpriced food and shopping for clothes online, it can reflect poor financial discipline and a lack of self-esteem. Start practicing sound financial habits, such as planning every big-item purchase days in advance instead of buying on impulse, using coupons and seasonal sales events to stock up on essentials, etc.
Find Stable Work
Stable work is difficult to come by these days. As competition in all job markets become cutthroat, employers are looking to fill their positions with only the best talent and qualified individuals. Since your full-time job is your main source of income, any abrupt and unplanned changes could drastically impact your financial lifestyle and self-esteem. Fire-proof your position by consistently improving your job performance. The more valuable you make yourself to the company, the less likely you get dropped from the company when budgets start to tighten.
Have a Fallback Plan
Your full-time job is your main financial plan, but it’s not always a permanent arrangement. When you do get fired, you need to immediately bounce back into the workforce to minimize financial losses and start earning money again. A fallback plan should consist of potential employers or companies you can apply to and any related sidelines that you can extract some income from while you’re still job hunting. It should also list the steps you need to take if and when you lose your full-time job. Not having a fallback plan can lead to panic and a drop in self-esteem.
If you cannot completely avoid it, use the tools that rack up debt sparingly. Credit cards and payday loans seem like a good idea at the heat of the moment, but its long-term financial impact is often underestimated. Debt, if unchecked, can become a vicious downward cycle until your bank accounts eventually dry up and, worse, you are forced to file for bankruptcy. Being unable to pay off debt plus any interest rates accrued can sting your your financial self-esteem. It can challenge you to give up and abandon any hopes and goals you have towards financial stability. Avoid it as much as you can, but if you do need to use it, use it sparingly.
Setting aside a fixed amount of money every month is now made easier, thanks to financial products and services offered by banks and other third-party institutions. Apps, like Acorn, allow you to invest small increments of money so that it grows in interest over time. And what’s great is that you don’t even need to manually deposit money into the account. It simply allocates a fixed amount every fixed period of time, whether it’s weekly, biweekly, or monthly. You can also use technologies to automate the process of paying bills and debt. That way, you can be sure you don’t get slapped by late-payment fees and surcharges.
Invest Your Money
The decision to invest your money proactively instead of letting it sit on a savings account and grow a measly 0.1 percent a year takes guts and confidence. Investing requires discipline, focus, and knowledge of the financial markets to attain success. These three qualities all coalesce into financial self-esteem. Be sure to put your eggs in the right basket by sticking with companies you know and using risk-reducing tactics, such as setting stop losses and using only a fraction of the leverage allowed by your broker. Owning even just a small fraction of a company or property can inspire a proud feeling and a boost in financial self-esteem.
Learn How to Dispute and Negotiate
Although this article isn’t encouraging you to go to war every time the cashier doesn’t hand you enough change, it does advocate that you dispute and negotiate transactions. For instance, if you were charged a fee for exceeding specific limits on a free basic account, you can usually dispute it and get a refund on your money. Most companies have a one-time courtesy policy that forgives you from whatever you did to incur said charges.
Financial self-esteem is founded on knowing your current financial capacity, having a plan for rainy days, and using your money wisely to grow your savings. Practice the eight things mentioned above to boost your financial self-esteem and, consequently, improve your quality of life.