Boost your money confidence to achieve financial success
Harvard professor Amy Cuddy has been recognized as an expert on confidence ever since her wildly popular 2012 TED Talk on “power poses.” Her new book, Presence, delves further into how we can bring more confidence into our lives.
Cuddy’s research complements that of behavioral economists, who have long supported the connection between managing money and psychology.
We talked to Cuddy about how boosting your money confidence can help you make better financial decisions and learned that it's not just about earning power. Financial success has a lot to do with believing in yourself.
Dealing with the unexpected is a lot like surfing
Harvard professor Amy Cuddy describes the act of riding the waves as accepting what life throws at you and making the best of it. “When you are surfing and the wave is right over you, it feels bigger than it is — it’s easy to forget you can simply duck under the wave or lay on the surfboard,” Cuddy says. “When we start to panic, everything falls apart cognitively, and we aren’t functioning in a way that is helpful.” Rather than overthinking the skills it takes to be a good surfer, Cuddy learned that the key to success was simply to “stay on the board.”
Ameriprise financial planning tip #1
The economy is a lot like the ocean — unpredictable — and market dips can feel as overwhelming as a huge wave. Rather than reacting by taking an immediate action, in most cases, it’s wisest to “stay on the board.” In other words, stay the course with your long-term plan. This advice is borne out by history: Despite all the economic downturns over the last century, there have been long periods of prosperity. This has resulted in an overall upward growth trend in the markets over the long term.
Making financial decisions makes you more confident
The conventional wisdom is that you need to have innate confidence to make good decisions. Not so, according to Cuddy. “Sometimes we become paralyzed even when we do have the information to make a decision, and that inaction alone can feed our self-doubt,” Cuddy says. “Coming to a decision can actually bolster your confidence.”
Cuddy’s theory is backed up by behavioral economics research that shows a direct tie between the deliberation and reward centers of the brain. In effect, decisions made are emotional and psychological “pats on the back” and have a positive effect on your self-esteem.
Ameriprise financial planning tip #2
When faced with money concerns such as debt or a retirement savings shortfall, a surprising number of people prefer to do nothing and hope the problem will go away. But taking even small steps to deal with the issue can go a tremendous way toward alleviating anxiety and boosting your financial confidence.
A confident person can take advice from others
When it comes to decision-making, it is common to confuse independent or unilateral thinking with confidence. According to Cuddy, a person with healthy self-esteem is not threatened by the opinions of others. “A confident person doesn’t need to one-up anyone else,” she says. “They can be present to others, hear their perspectives and integrate those views.”
Ameriprise financial planning tip #3
When it comes to investing, there’s more emotion involved than most of us would like to admit. Whether you choose your tax advisor, estate planner or financial advisor, a third-party expert can provide a rational perspective. And no matter how much time we spend studying investing and the markets, an opinion from inside the industry will bring a seasoned approach from someone who has learned to “ride the waves” of financial planning.