Wednesday, October 25th, 2017
CONFIDENCE: a feeling of self-assurance arising from an appreciation of one's own abilities or qualities. - Oxford Dictionary
Last year during a panel discussion at CPA Canada's first-ever financial literacy conference, Garry Marr, financial columnist with the Financial Post, lamented that in this day and age, most of us would feel ashamed to admit if we were illiterate. Yet when it comes to being financially illiterate, many Canadians almost wear it as a badge of honour, proclaiming that they're just not that good with numbers or they don't enjoy math.
That lack of knowledge has some pretty severe consequences as Canadians owe more than ever, are saving less, many don't have adequate savings to weather even the smallest of emergencies, and a large number are losing sleep at night mulling over their financial woes.
According to a study by the Financial Planning Standards Council (FPSC), stress alone is not enough to motivate someone to seek financial help. Instead, it's self-efficacy—a person's belief in their ability to succeed by achieving a desired outcome—that is a consistent and strong predictor of help-seeking behaviour. The more overall confidence a person has in their ability to undertake and successfully complete an activity like financial planning, the more likely they are to take action and get started.
"The benefits of financial planning to financial and emotional well-being have been well established," says Cary List, FPSC President and CEO.
Where Does this Lack of Confidence Stem From?
Dr. Moira Somers, a neuropsychologist from Winnipeg who specializes in financial well-being, thinks back to the 1980s and the self-esteem movement in schools, where educators were trying to instill self-confidence in students who were struggling academically.
"The notion was that kids who couldn't read, write or do math at the same level of their peers were taking a hit in the self-esteem department," Dr. Somers says. "Lots of effort went into trying to increase kids' self-esteem. It turned out that nothing increased kids' self-esteem as much as success in the domain that they were trying to succeed in."
What's a Better Way to Gain Confidence?
Dr. Somers works with a variety of financially fearful patients and her approach is: If you want to build your money confidence, you must build capacity and competence.
"That may start out with just 'making friends with' or actually looking at your bank balance. Your bank statement, your online banking. Really just learning how to be in the presence of financial information without hyperventilating."
Competence Comes with Exercise
Dr. Somers suggests these six simple tips to build your money confidence: