Kimberly Palmer: How to increase your financial confidence


Financial educator Melinda Perez still remembers the first time she felt financially confident. She recently started investing money outside of her employer-sponsored retirement account, recalls Perez, who lives in San Antonio, Texas.

Financial confidence, or belief in one’s financial abilities, may not surface as much as financial literacy, especially during Financial Literacy Month in April, but money experts are behind making smart money decisions. It is often said that it is some hidden element. “If you don’t have financial confidence, you don’t have the will to succeed. We replace that with financial self-efficacy.” says Perez.

But money confidence can be hard to come by. His NerdWallet survey, conducted in January, found that three-quarters of his Americans said he wasn’t confident about his personal finances in 2023, many of whom were in an uncertain American economy. is listed.

However, there are ways to increase your financial confidence. Here’s how to get started:

Learning important lessons about budgeting, saving and investing can help improve financial literacy and positively influence behavior, says Perez. “To increase financial confidence, we need to strengthen education, so we know the tools we need,” she adds.

Those seeking financial education should start with local organizations and community groups that provide information for free, she adds. Finding groups focused on financial literacy on Facebook or searching for “financial education resources” in your area may lead you to helpful resources. The US Government’s Office of the Comptroller of the Currency also provides a useful Financial Literacy Resource Directory.

“Find a community that talks about finance in an unbiased way.” That way you have a safe place to ask questions. That community could include friends and social media groups, Perez said.

Financial institutions can help, too, said Jennifer White, senior director of banking and payments intelligence at consumer research firm JD Power. Banks and credit unions often offer online tools to help customers visualize their cash flow and see how they can improve their savings and credit.

Such support is good for consumer confidence and the bank’s business. “When customers feel supported, they are more likely to be loyal when they open their next account. There is,” says White.

Beware of overconfidence

Confidence plays a big role in managing your money and debt on a daily basis, says Lucy Delgadillo, a professor of household finance at Utah State University’s School of Agricultural and Applied Sciences. But producing positive results depends on having the right amount.

“When you’re overconfident and ill-informed, you’re at your worst. You’re more likely to engage in risky behavior, such as over-extending credit or overly risky investments,” says the financial confidence researcher. says Delgadillo.

She encourages people to reflect on their self-confidence and level of knowledge and to act cautiously when there are discrepancies. For example, finding the difference between stocks and bonds and filling in knowledge gaps,” she says.

Overconfidence can come from bad sources, such as being misinformed by social media influencers. “Social media allows you to learn more, but that doesn’t mean you learn the big picture,” he says. She recommends cross-checking information gleaned from social media with other sources before acting, especially when it comes to trending topics like investing and cryptocurrencies.

White also points out that many Americans struggle with basic financial literacy on key topics such as compound interest and investment risk. “There’s a gap between what you think you know and what you actually know,” she says.

keep learning and improving

Increased confidence can lead to smarter money decisions, just like Perez opened his first investment account. “It’s like an athlete who practices and knows everything about a sport. Having that knowledge makes him a better participant,” said Kendall Capital’s Qualified Financial in Rockville, Maryland. Planner and CEO Clark Kendall says.

That practical knowledge is especially important today. “We are more responsible for our financial successes and failures than our grandparents,” he adds, adding that there are no pensions that jobs provide, so we need to save for retirement.

When I asked my daughter, who is about to pursue a master’s degree in business administration, whether Mr. Kendall’s degree was worth it, she said yes.

Kendall adds:


This column was provided to The Associated Press by personal finance website NerdWallet. The content is intended for educational and informational purposes and does not constitute investment advice. Kimberly Palmer is NerdWallet’s personal finance expert and author of “Smart Mom, Rich Mom.” Email: Twitter: @KimberlyPalmer.

NerdWallet: Your Financial Health Score

Regulatory Authority for Currency Financial Literacy Resource Directory .html

From January 17-19, 2023, The Harris Poll, on behalf of NerdWallet, conducted an online survey of 2,063 US adults ages 18 and older in the United States. Harris online polling sampling accuracy is measured using Bayesian confidence intervals. In this study, the sample data are accurate within +/- 2.8 percentage points using a 95% confidence level.

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