Make These 5 Changes to Become Financially Confident

You don’t have to have a lot of money or a high income to be financially confident. Anyone can achieve this state of mind at any financial level. Get started today by making a few subtle changes to how you interact with your finances.

Financial confidence is a state of mind rather than a number. It is that feeling when you are in control of your money and it isn’t in control of you. You could be in thousands of pounds of debt and be more financially confident than that guy at work who drives a Porsche.

Reaching a state of financial confidence is something you have full control over and a mindset you can work on right now. Yes like right this second! So without further ado, here are five subtle changes you can make today to start feeling more financially confident.

Know your numbers

Stop burying your head in the sand and get familiar with your numbers. Off the top of your head you should know how much you make, what your expenses are and how much you generally spend. You should also have a rough idea of how much you have in each account and what your net worth is.

If you don’t know these numbers or have a rough idea of what they are, start by finding out. Look at past bank statements, payslips, account balances to get an idea of your current financial situation.

Start tracking your finances

It doesn’t matter if this is on a fancy high tech spreadsheet, the notes app on your phone, a finance app or pen & paper. The only thing that matters is that you are doing it. Writing down every penny you spend will be an eyeopening experience. You will come face to face with something most people ignore. You may find your spending reduces going forward simply because you are more aware of it.

Write down your goals

Writing your goals down makes them real. The physical act of writing them down (or typing them up) takes them beyond just a wish in your head to something possible. But don’t just write them down and then ignore them, put them in a place you will see daily. Whether that’s a little post-it note on your bathroom mirror, your phone background or your laptop screensaver. Just seeing them constantly will increase your motivation to achieve them!

Make some goals

It would be hard to write down your goals if you don’t really have any. This is your reminder to sit down and set some. Brainstorm both short and long term finance-related things you want to achieve and turn these into goals.

For example, if you know you want to buy a house at some point in the next five years. Get realistic about this goal. Do you know the average price in your area? No? A quick Zoopla search will tell you this. Is this realistic for your income? How big of a deposit will you need? Break it down across your timeframe.

Let’s make this example real and choose my uni city for our research. Say I want to buy a 3-bed house in Lancaster in the next five years. Zoopla is estimating the price for a 3-bed terrace to be around £180k. Let’s over-inflate this number to give us a buffer and account for price inflation between now and the time you buy. Hence, I would need a budget of around £200k. Assuming a 10% deposit rate, I would need to have £20k to put down. Plus fees and moving costs, let’s inflate this budget to £25k.

You can now work out whether this is realistic and set an appropriate time frame. If I wanted to reach this amount in 5 years, I would need to save £5k per year, which is £417 per month. Now we have a tangible goal – “Add £417 per month into house deposit fund”. This seems far more achievable than “Buy a house in 5 years”, right?!

Obviously, you can adapt this method to suit your situation and the goal you want to achieve. Start with the end point and work backwards. Say that monthly cost was too much for you, simply play around with the time frame until you reach a point you can afford.

Knowledge is key

There is so so much free finance content out there now! Take full advantage of it all and listen to a range of voices to form your own opinion. Finance as a topic can be very confusing and is full of jargon that you are expected to just know. Take the time to research the concepts you don’t fully understand. Knowledge is power and just understanding these concepts will make you feel automatically more financially confident!

So there you go, five things you can do today that will make you feel more financially confident. Obviously this post has just scraped the top of the barrel when it comes to suggestions. There are so many additional ways to build your financial confidence (like creating a budget, saving a solid emergency fund, start investing, becoming debt free) but these five suggestions a great starting point. Plus you can do them today!

Do you already feel financially confident? Was there anything in particular that got you to that point? Please share in the comments!