According to a recent study, there is a found universal gender gap in financial literacy between men and women. While women reported not knowing the answers to more financial questions than men, this wasn’t solely due to a lack of financial knowledge. Rather, it came from a lack of confidence in financial decision-making.1 Whereas men's overconfidence has been found to hurt their investment performance by taking unnecessary risk.2 Follow these five tips to boost your results and financially empower yourself or others in your life.
#1: Set Smart Goals
Don’t limit yourself. Set some short-term goals that you can actively measure and achieve in a reasonable amount of time. These goals can be the stepping stones for your financial future and bigger long-term achievements. Progressing through your goals can be an important component of building your financial confidence over time.
#2: Build a Budget
Creating a budget is the best way to know exactly where your money is going and avoid surprises. If you find yourself stressed out about managing your money, setting and sticking to a budget could help. Over time, seeing your money spent intentionally can help build feelings of financial confidence and reassurance.
Studies show that because they are less confident when it comes to money, women are less likely to invest in stocks.1 Unfortunately, being reluctant to invest in stocks can truly put women at a disadvantage. On the other hand, men's overconfidence tends to lean towards more concentrated riskier portfolios.2 When planning ahead for retirement, investing in a diversified portfolio is often a key component of any comprehensive, long-term strategy.3
If you aren’t working with an advisor already, search for a financial professional who can support and guide you in developing a portfolio and creating a solid financial plan.4 Doing so can help increase your level of comfort with investments and improve your ability to make investment decisions on your own.
#4: Don’t Be Afraid to Ask and Answer Questions
It’s easy to feel insecure about not knowing all the answers. Asking questions and learning from the answers is an important component of increasing your knowledge base and growing your financial confidence.
When you’re more comfortable, pay it forward by answering questions for others too. This is in the hopes that, eventually, asking questions about money doesn’t feel wrong or taboo. If you have young children, take the time to teach them about financial decision-making and encourage them to ask questions as well.5
#5: Advocate on Behalf of All
No matter your gender, you can use your voice to advocate for financial equality, security and confidence. Speak up when you can, and encourage others to speak up as well. Creating meaningful conversations can help identify similar pain points amongst your peers, get your concerns addressed and develop a space safe to grow your financial knowledge and confidence.
It’s okay to strive for balance rather than perfection when it comes to your financial life. Make sure that you’re doing the best for yourself. Don’t let the fear of failure or lack of confidence hold you back from taking control of your financial life and achieving your biggest goals.