How Imposter Syndrome impacts financial managment

As a financial advisor with years of experience, I've seen how imposter syndrome can affect how people manage their money. Feeling like you're not "worthy" of success or fearing being exposed as a fraud can impact your financial decisions. Here are three areas worth reflecting on if you feel imposter syndrome is affecting your money management.

Undercharging

Undercharging is a common struggle I've observed among many business owners, freelancers, and entrepreneurs.

When people doubt their value, they don't charge what they are truly worth. However, this can leave people feeling undervalued, underpaid, and, in some cases, resentful.

How to charge what you are worth.

Charging your worth can feel daunting, especially if you're accustomed to undervaluing yourself, but it's a powerful step towards growing your confidence, your business, and your financial well-being. Reflect on the expertise, experience, and results you bring to the table. Recognise that charging your worth is not selfish; it's about fairness and sustainability.

Work through this list to help you reevaluate your pricing.

• Gather testimonials and success stories that illustrate the impact of your work.
• Think about what sets you apart from others in your field
• Look at what others with similar skills and experience charge.
• Understand industry benchmarks to position yourself competitively.
• Base your rates on value delivered, not just time or effort.
• Consider tiered pricing or packages to make your services accessible while reflecting your value.
• Be confident when discussing your rates. Focus on the outcomes you deliver rather than the cost.
• Highlight the transformation your clients or customers can expect.
• Be prepared to walk away from opportunities that don't align with your worth.
• Turning down work that undervalues you can open the door to better
• As your expertise grows, so should your rates.
• Don't be afraid to reevaluate your pricing annually or after significant milestones.

Financial Procrastination

There is a strong link between Imposter Syndrome and financial procrastination.

I have seen many people, mostly women, suffer from Imposter Syndrome, which can induce the belief that they "don't know enough," which can prevent them from seeking guidance or making proactive financial decisions.

People often tell me, 'I'm no good with money,' and they fear making decisions. This can mean they delay acting or defer decisions to others. Often, it's a fear of making the wrong decision. But it can also be linked to self-worth, as some people can feel they don't deserve prosperity.

To overcome this, take manageable steps, like reviewing bank statements or setting up a basic budget. Small wins build confidence. Then, build on your financial education knowledge. Attend workshops, read books, articles and listen to podcasts on financial literacy. Congratulate yourself on small wins to help rewire your self-belief.

Remind yourself that financial management is a skill that anyone can develop; there's no such thing as a 'natural-born' expert.

Create and stick to a plan; even if it's not flawless, making a start is a significant step in the right direction.

Overcompensating

Overcompensating because of Imposter Syndrome often stems from a deep-seated need to "prove" oneself to others, or even to oneself, and it can manifest in unhealthy financial behaviours such as overspending or taking on unnecessary burdens.

Let me explain what I have witnessed and how this works.

The Connection

Seeking validation through spending

People experiencing imposter syndrome can feel inadequate despite their achievements. To compensate, they might overspend on luxury items, extravagant gifts, or appearances to project success or competence, hoping to gain external validation.

Living Beyond Means to Match a Perceived Standard

Imposter syndrome can make you compare yourself with peers, colleagues, or societal ideals. To "keep up" or surpass those standards, you might take on financial burdens like unnecessary loans or credit card debt, believing this will cement your legitimacy.

Fear of Exposure Leading to Financial Overcommitment

The constant fear of being "found out" as a fraud can push people to invest in appearances, whether through a lifestyle, clothing, or experiences that signal success, regardless of affordability.

Overcommitment to "Prove" Competence

Feeling unworthy might also lead to overcompensating in professional or personal scenarios by taking on costly certifications, courses, or projects that seem unnecessary but seem essential to validate one's abilities.

The Impact

• Emotional Burnout- overspending doesn't resolve feelings of inadequacy, creating a cycle of stress and self-doubt.
• Financial Instability - overcompensation can lead to debt, eroding financial stability and compounding feelings of failure.
• Lost Focus on True Goals -resources get diverted from meaningful financial goals like savings, investments, or personal development.

How to Break the Cycle

1. Identify the Root Cause: Reflect on whether certain spending decisions are motivated by the need to prove yourself rather than genuine necessity or desire.
2. Set Financial Boundaries: Develop a budget based on your values and long-term goals, not perceived societal expectations.
3. Celebrate Authentic Success: Acknowledge your achievements and remind yourself that your worth isn't tied to material possessions or external validation.
4. Practice Gratitude: Focus on what you have rather than what you think you need to "fit in" or "prove yourself."
5. Seek Support: A trusted mentor, coach, or financial advisor can help you stay grounded and work through the emotional side of financial decisions.

Imposter syndrome can trick you into thinking you need to overperform or overspend to be worthy. Recognising and addressing this can help you make healthier financial choices that align with your true self, not a false standard.

Imposter syndrome doesn't have to dictate your financial future. By taking consistent, small steps and seeking supportive environments, you can gain control over your finances and feel proud doing it.

The good news is that awareness is the first step in overcoming these patterns. Building your financial knowledge, setting clear goals, and celebrating your achievements, no matter how small can help you combat the effects of imposter syndrome.

I discussed this topic on a recent podcast with Donna E. you can listen here.

Have you faced the challenge of Imposter Syndrome?

What steps have you taken to find a way forward?

Share your experiences or ask questions in the comments below.