8 Integral Things to do to Build your Financial Confidence

How do you feel about your money? Are you often lost in the jargon of savings and investing?

Do you even consider managing your finances?

Well, if not, don’t worry, you are definitely not alone. Many people feel equally lost about the question of how to manage their finances. 

Yes, financial ideas can be challenging, but the only thing that gets you through this mess is financial confidence.

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Financial confidence vs financial freedom

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Financial confidence and financial freedom are two concepts that may seem similar, but they are actually distinct and complementary.
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Financial confidence refers to having the knowledge, skills, and mindset to manage money effectively.
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It involves understanding financial concepts, being able to make informed decisions, and having the discipline to stick to a financial plan.
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On the other hand, financial freedom refers to the ability to live life without the constraints of financial limitations. It denotes financial stability and also means having the financial resources to pursue one's passions, whether that be starting a business, traveling, or spending time with family.
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Financial confidence is necessary for building wealth and achieving financial security, but financial freedom is the ultimate goal. By developing financial confidence, individuals can build the foundation for financial freedom and live the life they desire.

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8 Ways to Build Your Financial Confidence

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Financial confidence is all about taking charge of your finances and directing them in the right direction to accomplish your goals.

But, the question is: How to develop financial confidence

It is definitely by practicing more. It may all seem confusing at first, but as you finally start learning and put your learnings to actual work, the basics would become handy.

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1) All you need is courage- start NOW 

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The best thing you’ll ever do on your financial journey is to start taking steps rather than waiting.
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Start by facing your financial fears. For instance, if your financial fear is losing money when investing, start by educating yourself with various investment and portfolio diversification strategies.
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Let go of the doubts and just start somewhere.
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If spending is a problem for you, then you can start by making a budget and sticking to it.
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Want to build your own home in the next 5 years? Lay out a plan. Are you under debt? Find finances to tackle it. Whatever your goal is, just start working towards it. You can learn on the way.

Remember that you do not need to know everything about money.

How you plan for yourself depends on you. Every time you get stuck somewhere, just ask for help, look online, network with experts, etc.

Start believing that you are good with money - learn, plan, and implement.

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2) Financial literacy is the key 
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When you finally start to take charge of your finances, it is important to educate yourself.  Financial literacy is the key to financial confidence.
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Just keep learning and understanding the concept of money.
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If you love books, then start reading finance books by experts. Finance podcasts, YouTube channels, blogs, etc, are all also  great way to improve your knowledge about money.
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Try to add these to your daily routine, like your everyday commute or break times. This way, you will also understand and learn financial concepts that seem complex on the go. For example, you can figure out which investments would interest you or what type of budget and saving plan you will be committing to.
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‍To master the art of money, consistency is important.
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Make sure that your healthy financial habits are a part of your daily routine. This will not only help you expand your money but also enhance your financial confidence.

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3) Budget basics and the emergency fund 
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No doubt, basics are always essential, and when it comes to finance, your budget and emergency fund are the most important things. 

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For the budget, you can try out various things and then find your interest.

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For instance, you might or might not like writing down your budget. In such a case, try to look for online budgeting apps like the Mint app to keep track of your finances. 

It is always a good idea to discuss your budget with some expert, friend, or family member that you trust. If that doesn’t sit well with you, you can also plan out things on your own. 

For emergency funds, insurance & basic savings are a must. Options like gold or digital gold, FDs, etc. can also be beneficial.

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To know more about emergency funds, you can refer to this article. 
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4) Your Money Mindset

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What you think about money and your mindset do affect your financial decisions.
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If you constantly worry about losing money, growing money, or anything similar, even a good amount of wealth won’t satisfy you.
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To lighten up your financial fears, you can try journaling about money - your goals, wants, perceptions, and just general outlook about finance - anything!
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Decide what you want to feel and already feel about your finances and work on it. Remember that you must always stay away from the myths built around money.
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To grow money, you need money. It is essential to focus on first earning money, saving it diligently, and then beginning your experiments.

5) Long-term focus 
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When you invest, have a long-term outlook.

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The reason is, when your aim is to generate wealth, you can not do so with a highly risk-averse attitude.

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FDs or too secured investments won’t generate your wealth. They generally don’t help you beat inflation. You will have to eventually try out active investing in the market, in your skills, etc.

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On the other hand, stocks are volatile and do fluctuate on a daily basis  and are accompanied with higher risk, but on average, over the longer run, such volatility has always given higher returns.

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So, be consistent with your investments and do not let yourself get too discouraged or encouraged by short-term downturns or upturns, respectively.

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And yes, do make sure to even out the risk in your portfolio. You need cushions like FDs, gold investments, etc, for your other risky investments- but not rely ‘just’ on them.

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6) The right time to invest is NOW 
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Are you still doubting yourself or postponing investments because ‘this’ is not the time?

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Well, there will never be a ‘perfect timing’- all that’s there are the current opportunities.
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Make sure to make wise use of them and ace your financial planning. 
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7) Do not stick to just one job/income source
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We previously discussed that to grow money, you need money.

In the current world, sticking to just one source of income is not anywhere close to being enough.

If you follow any finance influencer, you already know the importance of a variety of income sources. 

So, maintain at least two such sources of income, and if you want, create a separate budget plan for both.
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The best way to achieve this is to find your interest, get certified, and start a side hustle. 
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8) Get rid of that debt 
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Starting your finance journey with 0 debt is as important as maintaining a positive attitude towards money.
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Be it credit card debt, home loan, study loan, gold loan or whatever - if it is bothering you and not letting your money grow further, then you no, you don’t need it.
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To get rid of debt faster, start with the one that bothers and costs you the most.

Once you are done with debt, start investing more actively and switch to high return generating assets. This will help you regain your lost confidence in managing your finances.

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Conclusion 
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Maintaining your finances won’t be a big deal once you commit to it and align your actions with your goals.

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To build your financial confidence, a good mindset, along with active saving and investment management, is crucial. Follow the above-mentioned tips and direct your money the way you want!
 

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