Have you ever felt afraid to ask for a pay rise? Have you found the idea of negotiating a deal awkward or refused to open a bank statement? If so, you are almost certainly paying the financial confidence tax.
The confidence tax is the money we lose when self-doubt starts to make our decisions for us. It makes us doubt our worth, our ability to make good decisions, and our ability to manage money. And it can wreak havoc on your finances.
Many people are assertive in lots of areas of their life, but when it comes to money, suddenly things get difficult. Doubt creeps in; fear of rejection; the worry that if we ask for more, we’ll come away with nothing.
It is something that can affect anyone – although it tends to affect women more – and when we fall into the confidence trap, we need to find a way out.
Financial confidence starts when we are children, with the messages we absorb from our parents. If you grew up watching your mum having to ask your dad for money, or in a home where women didn’t work, that becomes your framework.
It might also come from what you saw in films and books, where rich people are often portrayed as mean. From there, we get the message that it is wrong to desire wealth – it makes you materialistic and greedy.
All of this shapes us as adults. Because if we are told that money is scarce, we might feel like we should be grateful for any level of pay. And if we believe that aspiring to more makes us greedy, we might be afraid to negotiate, whether that’s on a job contract or at the local boot sale.
Financial confidence is knowing what you are worth and being willing to express that. Lacking that confidence means we miss out and it chips away at the rest of our lives too.
When I worked as a beautician, for example, I’d often not charge enough. I wanted my prices low enough to get customers, but then I became too afraid to increase them for fear of losing those customers. This is how self-doubt can start to control you.
This is partly British culture, where we just don’t talk about money, and partly gender-based. Women are more susceptible to the confidence tax because they are often taught that negotiating as a female is “being difficult”.
When I started in my industry and got approached about work, my first thought was always: I hope they pick me. These days, I start with: what am I worth and what can I bring to this project?
What I’ve learned as I’ve gotten older, and as my business and confidence have grown, is not to catastrophise the “no”.
Sometimes you’ve got to dig your heels in and stand firm. And if I’m not picked, I know it’s not personal. You have established your worth, and they have made a commercial decision.
And while there are times that I will accept a lower fee, perhaps because it’s a project I’m particularly passionate about, that decision isn’t due to a lack of confidence.
Of course, some people are more naturally confident anyway. Some people go on holiday to the market and enjoy bartering, while others want to shrivel up into a hole in the ground at the thought of it. But the good news is: you can change.
First, do your research. Asking for a pay rise? Provide evidence of where you have gone beyond your remit, what you have achieved and what would free you up to do more. Raising your business prices? Look at the competition and what sets you apart. Going armed with facts takes the emotion away.
Don’t bury your head in the sand. If you’re someone who refuses to look at your banking app or open the post, it’s time to take a deep breath. Being avoidant is just another way our lack of confidence can manifest – and the longer you leave it, the worse it gets. Start taking control one step at a time: open the app, create a budget, set up a spreadsheet.
Understand your feelings about money. Does it make you feel anxiety, guilt or shame? Some people feel uneasy having too much, while others feel like money is scarce no matter how much they have. Consider what you learned when you were growing up. Reflecting on this can help tackle your lack of confidence.
And lastly, don’t wait to start advocating for yourself. Sometimes confidence only comes afterwards. Asking for a pay rise might feel awkward, but when your boss says, “yes, you’re really good at your job and I don’t want you to leave”, you’ll know you were right to ask and be more likely to do it the next time.
If you’re waiting to feel confident before you tackle your finances, you’ll be waiting for ever.
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