Confidence counts so much in life. It helps you get your dream job, face challenges others to consider too hard, and navigate the obstacles life can throw at you. When you are financially confident, you take charge of your financial situation thereby getting a much stronger chance of fulfilling the goals that matter to you.
What is Financial Confidence?
What is Financial Confidence?
There is no agreed definition of ‘financial confidence’, but this is how l define it “Confidence means self-assurance and trust in your ability. Therefore, financial confidence, in the same manner, is trusting that your finances are going to support you going forward.” Feeling confident about one’s finances take many diverse forms from defensive to offensive. It manifests itself in the mentality which one is going to survive and thrive in any financial climate. For example, on the defensive side, how prepared will you be if another pandemic hits? You should be confident that no external event can wipe out your ability to make money or your previous savings. Sure, a bad economy can hit your wallet, but it can’t take away everything right!. An example of the offensive side, if you have saved up an emergency fund, have multiple income streams, and a solid investment portfolio, you can make confident moves to grow your money.
The bottom line is that financial confidence means you should be prepared for the future whether its good or bad. Be ready and secure to handle anything that comes your way. You should get to a point where you don’t have any pressure or stress when it comes to money. Be the man with a plan and all you have to do is execute. If you do that, you are going to continue to get wealthier in the process. So as each year passes, put yourself in a better place towards financial freedom. Now you might say, “Financial confidence sounds amazing and I want that feeling for myself. But how do I get there?”
Follow these 4 steps and your bank account and confidence will soar.
4 Steps To Gain Financial Confidence
- Know your WHY & PURPOSE
I believe your WHY is your anchor in this journey to financial confidence. In other words, your WHY comes down to who you are doing it for, and what’s your emotional reasoning? I always say “quality decisions matter” Do you want financial confidence so you can be and give more to your spouse, children, parents, church, charities? Or do you finally want to live the lifestyle of random vacations and adventures you’ve always dreamed of? (No shame about that.) The reason why this is important is that if you don’t have an emotionally compelling reason to save more, spend less, and invest for your future, then this is going to be like a New Year’s resolution that dies a quick death in January. That’s meaningless. So, it’s wise to take some time to get extremely clear on why you want this. And then envision yourself making it to your dream financial destination. When you’re emotionally committed to your WHY, you’ll have the motivation to stick this out.
- Save at least 20% of your monthly income
You’ll never get ahead financially if you’re spending all the money you’re making. The only way to make progress is to save more than you spend and cultivate the culture of paying yourself first. I believe you should save at least 20% of your income. By saving this much each month, you’ll be able to spread it around three important areas:
Your emergency fund
Your investments
Your expenses
If you say you can’t save 20% of your monthly income because you don’t make enough, that’s no excuse. There are plenty of solutions to your income problem:
- Pick up a second job for nights and weekends
- Produce more results at your job then ask for a raise
- Spend less money on unnecessary purchases
- Downsize your place or get a cheaper car
- Take less extravagant vacations
- Build an emergency fund
An emergency fund helps you weather any financial storm. Knowing you have money stored away for a rainy day is a huge boost in financial confidence. How much money should be in your emergency fund? Experts debate it from recommending you have 6 months of living expenses (living expenses equals the total costs of your bills each month, in this case, multiplied by 6), to 12 months. I advise starting with at least targeting a one-month cover of your living expenses. So, start putting away some money into a separate savings account that is solely your emergency fund. Don’t mix it with another checking or savings account, or you’ll be tempted to spend this money. The best part is once you reach your emergency fund goal, you will no longer need to contribute money to it. You’ll now have extra money to invest in yourself and the stock market.
- Invest at least 10% of your monthly income
I’ll never forget the quote, “You don’t have to be wealthy to invest, but you have to invest to become wealthy.” It’s so simple, yet powerful! To get your money working for you, invest 10% of your income each month. What should you invest in? Good question. Check out the article on investments here…
In conclusion, it is not about how much money you make it’s about how you spend your money, and how hard you make your money work for you. It’s about the intentions you have with your money. It is now time to boost your financial confidence. Everyone needs it
#Moneymatters
#Upyourmoneygame
#knowyourWHY
By Tarie Manyonga
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