How imposter syndrome can hurt your finances
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Impostor syndrome is a phenomenon that manifests when people feel like frauds even if they are actually very capable. While research shows that one out of every five people experience this in their work or academic life, many don’t know that this destructive phenomenon is actually even more prevalent in many peoples’ financial lives.
As Ernest Zamisa, Financial Adviser at Momentum explains, this is when people start to believe that their financial position will never improve, or that they are not ‘money-minded’. “A lot of the time, you can get into the mindset that your past financial mistakes cannot be fixed, or that the financial world is too complicated for you to get your head around. As a result, people often start avoiding their money instead of facing and fixing issues head-on.”
He adds that these feelings are particularly common among women. “The fear that an individual somehow does not deserve to improve their financial position can make it much more difficult to their own decisions. This is probably the easiest way for people to get stuck in a pattern of living month-to-month and not saving.”
However, a solution exists, according to Zamisa. “The most important step is to break the pattern by asking for help. Reaching out to a trusted financial adviser and asking questions about their own financial paths can already be very enlightening. Advisers are able to provide sound financial advice that will help one to make informed decisions about their money - so they can achieve their dreams and goals. Whether you’re moving up the corporate ladder or planning your retirement, having a certified financial planner you can rely on can help you overcome this fear of not being capable, or fear of the unknown.”
For those suffering from imposter syndrome when it comes to their finances, he has some financial tips that he can offer. Zamisa points out that while these steps are incredibly simple, they do in fact help to combat financial impostor syndrome as your financial position improves over time:
- Break the silence. Many people are stuck in a cycle of financial impostor syndrome because they feel ashamed of their financial position. Therefore, the very first step is to confront these feelings. No matter how hard it may be, find someone that you trust and talk about everything that is currently going on in your financial life. Whether you are talking to a friend or a financial adviser, coming clean removes an incredible weight from one’s shoulders and helps to remove the feelings of shame from the equation.
- Learn to budget and stick with it. An integral part of effectively managing your finances is learning how to budget and then sticking to that budget. Divide your income among needs, wants, savings and debt repayment.
- Track your spending and stick with the plan: Tracking your spending on a regular basis can give you an accurate picture of where your money is going and where you’d like it to go instead. This takes practice but it is crucial. Once you know exactly what you have left, try to work with that, but learn to live on a smaller budget.
- Create an emergency fund. The important thing is to ensure that you take your savings out the minute your salary comes in, and account for any debit orders that come off. Create a savings account especially reserved for unexpected events or expenses that may occur.
- Establish a good credit score. Use credit carefully, and if you want to have a credit card, use it either as a debit card or make sure your limit is low and you are able to pay it off every month. Keeping your balance at a small percentage relative to your credit limit is best for building good credit.
“The earlier you start planning for your future, the more likely you are to reach your financial goals. With that said, it’s never too late to get back on track and move past mistakes. We can help you work out your short-, medium- and long-terms goals and prioritise them, so you can start planning and managing your finances to achieve them,” he concludes.