Self-compassion: The only thing holding you back from mastering your money

Money & Relationships, Real Money Talk Mint | Self-compassion: The only thing holding you back from mastering your money

Regardless of how much experience you have with managing your finances—be it decades or days—a common psychological challenge I see when it comes to managing money is low self-esteem. Psychological research suggests that people with high self-esteem focus on growth and improvement, whereas people with low self-esteem tend to focus on not making mistakes in life. So, the key challenge for most when it comes to managing money is figuring out ways to boost self-esteem so that growth and improvement can happen.

This is where self-compassion comes in. Self-compassion is the act of being less critical of yourself and potential shortcomings. It’s also a form of optimism that takes shape by giving yourself permission to relax a little bit. In fact, I would argue that self-compassion is not only a key skillset for financial improvement, but also for overall quality of life. Here are five strategies for practicing self-compassion today:

#1 Daily positive affirmations

Self-encouragement can go a long way when it comes to boosting self-esteem, however, sometimes positive affirmations can backfire for people with low self-esteem, which is why it’s important to build yourself up in a realistic and authentic way. Instead of waking up and telling yourself, “I’m going to be a millionaire”, try something more like “I am resilient and I’m going to get through tough financial times.”

Pro tip: Write down your affirmation on a piece of paper and tape it to your bathroom mirror. You can read it to yourself as you’re getting ready for the day.

#2 Make a list of past financial achievements

The best way to challenge the negative voice inside your head is to use facts to disprove your beliefs. Past financial achievements are proof that you have what it takes to be financially successful. Don’t worry so much about the quantity of achievements, and whatever you do, don’t give someone else credit for your achievements. Even if someone helped you out financially, YOU were the one who asked for help. YOU were the one motivated to make the change. Don’t forget that.

Pro tip: Document your achievements in a financial journal or diary. Be sure to look at your achievements list from time-to-time as a reminder of your success and a quick self-esteem boost.

#3 Be your own best friend

Have you ever noticed how easy it is to be kind to a friend when they’re feeling down or having a bad day? It’s possible to do the same for ourselves. If you’re like me, you may make the initial mistake of thinking that being kind to yourself will force you to lose your edge, but it’s just the opposite! Remember that high self-esteem is related to growth…and growth means success, so believe it or not, people who are successful have a keen ability to bounce back faster after a setback because they aren’t as hard on themselves.

Pro tip: Use a financial journal or diary to vent about a financial problem you’ve encountered.  Now pretend to be one of your best friends and write down the advice you think they’d give you.

#4 Ask for advice and welcome compliments

One of the underlying problems when it comes to financial management is a lack of feedback. Think about other life domains: work, school, sports, hobbies, and relationships. What they all have in common are mentors! Managers, teachers, coaches, experts, and partners are often there for us providing feedback and sometimes praising us when we’re doing well. With money management, on the other hand, most of us don’t have an expert or coach to get feedback about our performance. I highly recommend paying for at least one financial advising session to find out what you’re doing well. Be open to getting feedback about areas to improve, but really soak in and acknowledge the compliments about what you’ve achieved so far.

Pro tip: I’d recommend hiring a Certified Financial Planner (CFP®), someone who is more interested in looking at how you organize your money. If a CFP® isn’t within your budget, consider talking to a trusted friend or family member about your high-level financial goals and the progress you’ve made so far (no need to discuss specific numbers if you don’t feel comfortable).

#5 Don’t let your net worth define your real worth

If you’re struggling with low self-esteem I caution you when looking at your net worth. I’m not saying live in ignorance, but what I am saying is that it’s extremely unfair to let a single number define who you are. At Mint, our intent is not for you to see the net worth number and feel like you are worthless. The real intent is to use your net worth as a starting point for creating financial improvement goals. That being said, seeing it without context can do damage to your ego and work against your goal of improved self-esteem. To counter this feeling, I recommend writing down a list of qualities that make you good at managing your finances.

Pro tip: Look for clues in other areas of your life that have helped you save money and earn money. Perhaps it’s that you’re really organized so you end up paying your bills on time, or that you’re a good chef so you don’t eat out a lot which helps you save money.

If you’re struggling with low self-esteem, know that you’re not alone. Give these five strategies a try, and let me know if you notice a difference in your ability to be more self-compassionate.

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