Recently we shared with you how to calculate your net worth and what the average net worth is based on your age. Now we’d like to focus on your self-worth.
You may be wondering what your self-esteem has to do with your finances, but it turns out, our relationship with ourselves can make a huge difference when it comes to our finances.
“The state of our net worth is a direct reflection of our self-worth,” says Nancy Levin, author of Worthy: Boost Your Self-Worth to Grow Your Net Worth. “When we begin to let go of our unconscious limiting beliefs about our self-worth, money issues start to dissolve.
“It works in reverse too,” Levin said. “When we heal emotional wounds surrounding finances, other areas of our life will begin to heal as well, and our net worth increases in ways beyond our bank balance.”
How Realizing Your Self-Worth Impacts Your Net Worth
1. Know Your Value
Our perception of ourselves and whether we view ourselves as being worthy of money has a direct correlation to our net worth, according to financial psychologists.
According to Barbara Stanny, a leading expert on women and money and author of Success, persons who earn larger sums of money typically have a higher level of self-worth. Stanny shared that many of the people she has interviewed reported feeling “unworthy” of earning a higher income initially and had to overcome those feelings before they saw their net worth improve.
2. Stop Comparing Yourself to Others
Focus on your own progress and set financial goals for yourself. There is an endless number of people for you to compare yourself to around the globe. More than likely, someone will have more money in their bank account, live in a home you can only dream about, travel to exotic destinations you can’t afford to visit and purchase clothing or decorative pieces that are beyond the scope of your budget.
Constantly comparing yourself to others may not only keep you from being genuinely happy for others, but it may cause you to emotionally overspend by charging items on your credit card.
People begin to feel anxious about money when they link their self-worth to their net worth, said Brad Klontz, Psy.D., author of Mind Over Money. “These people often take bigger financial risks because they want to have the stories of big gains to impress their friends.”
3. Accept Compliments, Don’t Brush Them Off
Name one thing you are grateful for each day or list the ways you give back to the world, regardless of whether it’s work-related or personal.
It might sound silly, but one of the key characteristics of an above-average earner is having a healthy self-esteem and a belief in themselves, according to research from the Financial Samurai. Research has also found that those with good self-esteem tend to save more, ask for a higher salary/raises, invest money and take risks like starting a business or buying real estate.
Persons with higher self-esteem are also more likely to bounce back from debt more quickly than those with low self-esteem.
4. Become More Assertive
According to Stanny’s research, high-earners still feel fear but act anyway. The Financial Samurai’s research also found those with higher self-esteem are also more likely to actively pursue ways to build wealth because they are “unbelievably optimistic” that they can always make more money.
Remember, just because someone has high self-esteem does NOT mean they don’t have any fears. The fact of the matter is everyone has fears about money, so don’t let your fears run your life.
Try negotiating lower interest rates on your credit cards to start or ask for a raise.
5. View Yourself as an Investment, Practice Self-Care
Paying attention to your money is an act of self-care, according to Kate Northrup, author of Money: A Love Story.
For example, if you decide to not buy a new pair of shoes because you would rather save the money, you are choosing to believe you are worthy of keeping the money you make. On the other hand, if you opt to buy the shoes and not save money, or if you completely avoid managing your finances, you may, at least subconsciously, believe you are not worthy of having money.
“Until we feel worthy – deep inside – of the great life we desire, we won’t feel worthy of money the outside,” Levin said. “When we don’t feel worthy on the inside, we develop patterns that prevent us from having the money, love, time, energy, health, joy we want and need.”
Have you noticed a change in your self-esteem since you’ve begun managing your finances? Tell us in the comments below!