Research consistently shows that individuals with higher incomes have higher self-esteem, which refers to more positive self-evaluation and perception.
A new study was published in psychological science found that not only do individuals experience an increase in self-esteem once they begin earning more, but having a higher level of self-esteem can also increase one’s income over time. This means that financial self-esteem, referring to a person’s sense of worth in relation to their finances, can influence their financial reality.
Here are two mindset shifts to improve your financial self-esteem.
1. Start believing you deserve money
A 2019 study found an interesting result for financial self-esteem when participants “self-verified” that their financial behavior confirmed their beliefs about themselves. Researchers found that people with low self-esteem choose inferior products because it reinforces their low self-concept. However, when they were experimentally induced to see themselves as consumers of superior products, they were less likely to choose inferior products. This singular mindset shift allowed them to choose better for themselves.
Similarly, if you find yourself consistently settling for less than you’re worth, especially when it comes to accepting job offers with inadequate pay, you may need to adjust your financial beliefs that you What are they worth? Self-esteem is also linked to a person’s financial security or level of anxiety.
Financial self-efficacy, which refers to confidence in one’s ability to earn money and make financially sound decisions, as well as holding yourself in high regard can enable you to pursue opportunities that pay better. Are. A growth mindset about one’s socio-economic status also improves one’s psychological well-being.
It is also important to note the broader influence of socio-cultural factors that contribute to one’s financial self-esteem. Take the gender-based pay gap, for example. Earning less than their male counterpart can create a feeling of undervaluation, disappointment and reduce confidence in their abilities and self-esteem.
From an early age, individuals are exposed to messages about gender roles, which can shape beliefs about what they are capable of achieving. Women in particular may be told subtly or explicitly that certain jobs or compensation levels are less suitable for them.
The absence of visible role models or mentors in high-paying or leadership positions can reinforce this belief, affecting an individual’s aspirations and willingness to negotiate for better compensation.
2. Increase your overall level of self-esteem
A person’s self-esteem is often determined by his social status. This can be a dangerous association, as a decrease in income may indicate that the individual is of lower social status and is less valued in society or is likely to face social rejection, which can seriously affect self-esteem. Could.
Additionally, research shows that basing one’s self-esteem solely on financial success leads to negative consequences such as higher levels of social comparison, financial distress, anxiety, reduced sense of autonomy, and lower emotional well-being.
While positive emotions enhance our ability to create wealth by expanding mental resources and allowing creative solutions to financial problems or goals, negative emotions resulting from low financial self-esteem have the opposite effect.
Although it may seem counterintuitive to the process of increasing your financial self-esteem, it is important to ensure that a person does not allow finances to have such a large impact on their self-perception and that they are able to differentiate themselves in many different areas. Remind yourself of your value. their lives. A reasonable amount of financial self-esteem results from a balanced sense of overall self-esteem, which is achieved by a healthy and compassionate attitude toward oneself.
Some important ways to increase your financial self-esteem include:
- Seek guidance. Increase your understanding of personal finance. Read books, take courses, or attend workshops to improve your knowledge about budgeting, investing, and managing money. The more you know, the more confident you’ll feel.
- Set specific goals. Define clear and attainable financial goals. Whether it’s saving for a vacation, paying off debt, or investing for retirement, seeing yourself achieve small goals one by one can help you trust yourself and boost self-esteem.
- Negotiate assertively. Improve your negotiation skills for a salary adjustment and practice advocating for yourself. Don’t settle for less than you’re worth or what others in your position would be paid.
- Celebrate milestones. To boost your confidence and motivate yourself to continue improving your finances, acknowledge and celebrate your financial accomplishments, no matter how small.
- Avoid comparison. Avoid comparing yourself to others and focus on your progress. Understand that financial confidence is a journey and that small steps forward add up to significant improvements over time.
- Nurture your self-esteem. Treat yourself with kindness and understanding, especially during difficult times. Accept that everyone makes mistakes and experiences failures. Identify and challenge negative self-beliefs or self-critical internal dialogue. Find out who you are beyond external roles or accomplishments and surround yourself with supportive people who encourage your personal growth and well-being.
Limiting beliefs about yourself can influence beliefs and fears about money. By cultivating a positive relationship with yourself, making thoughtful financial decisions, and recognizing your inherent value beyond finances, you can experience growth and rewards beyond material benefits.