Many people think of confidence as a bit of a fuzzy concept, or at least a soft skill. Certainly not something that will actually add zeros to your net worth. So a recent headline stating that improving financial confidence could boost net worth by up to £142 billion instantly caught my attention.
The article was based on a study from UK money management app Moneybox, known as the Moneybox Financial Confidence Index, and the claim was not — obviously — about any individual increasing their net worth by such an elevated sum, but rather about how the UK population could increase collective net worth, by increasing collective financial confidence.
The study surveyed 4,000 adults to assess their financial confidence and how it impacted other behaviors such as investing, planning for retirement and even things like monthly budgeting. While it was a UK study the concepts are fairly universal, and what the researchers discovered is that there’s a strong link between increased financial confidence, financial behaviors (particularly investing strategies), and ultimate net worth.
This is hardly surprising. Financial confidence is one of the important factors behind why the rich get richer, and the poor often fail to increase their net worth long term, even if they are blessed with a big lottery win or other windfall. It’s about having the knowledge to handle money, but also the confidence to invest more advantageously, which often means more aggressively.
Survey respondents who identified as being confident about their ability to manage their personal finances had a significantly higher net worth — by about £86,000 ($114,800) overall — compared to those who expressed that they don’t feel financially confident. This held true regardless of personal income, indicating that financial confidence and knowledge is more important when it comes to building wealth than income level.
In particular, the survey found a powerful link between financial confidence and investment. Among the financially confident respondents, 44% reported having current active investments, with an average of £111,702 (around $149,000) invested, while among those who stated they are not financially confident only 15% said they currently held investments, with an average investment value of £27,957 (about $37,325).
It could of course be argued that this correlation works the other way: That those who have managed to invest and see those investments growing are more confident as a result. The truth is probably a combination of both. Financial confidence leads to better investment decisions, and better investment decisions ultimately pay off and lead to higher financial confidence.
Either way, it seems fair to conclude that increasing financial confidence is an important factor in boosting net worth, especially considering that this difference persisted across groups with very similar salaries or personal income, with those professing confidence having a much higher net worth on a similar income.
So how should we increase our financial confidence? The organization that ran this survey had some suggestions.
- Know your goals — and commit to them. Write them down and maybe share them with friends and family.
- Find the right financial products — based on the above goals, so you make the best investments for your circumstances.
- Spend 30 minutes a day on managing your finances, tracking your goals, and improving financial literacy.
I would add a few more:
- Make education a top priority — there are a ton of resources for learning about personal finance out there. Find the best ones for your life stage and spend time on them each day.
- Make education fun — because we all learn better when we’re having fun. Find reputable financial influencers you love. Follow them on social media, watch their YouTube or TikTok channels.
- Consume financial education in a way that works for you — whether that’s reading books, watching documentaries or signing up for an online course.
- Don’t go it alone — find a financial advisor or coach to help you along the way, or seek out a mentor among your own family, friends or acquaintances.
Your net worth is the result of a lot of different factors, including of course your actual income, but if confidence really is making the difference between a higher and lower net worth — even when two individuals have the exact same income — it’s definitely something worth cultivating.
Frequently Asked Questions
How do you calculate your net worth?
Net worth is everything you own minus everything you owe. Assets include cash, retirement and investment accounts, the value of your home, and other property, while liabilities include mortgages, student loans, car loans, and credit card balances. Recalculating it at regular intervals, such as monthly or quarterly, shows whether you are moving in the right direction.
Does financial confidence really lead to a higher net worth?
The study discussed in this article found that people who felt confident managing their money had a meaningfully higher net worth than those who did not, even at similar income levels. The relationship likely runs both ways: confidence encourages actions like investing, and seeing progress builds more confidence. Either way, building knowledge and steady habits is something you can work on regardless of income.
What are simple ways to build financial confidence?
Start by writing down specific financial goals and choosing accounts and products that fit them. Setting aside regular time each day or week to review your finances and learn something new builds familiarity and reduces anxiety. Books, podcasts, and reputable online creators can help, and a financial advisor, coach, or mentor can fill in knowledge gaps.
Why does investing help net worth grow faster than saving cash?
Over long periods, diversified investments such as stock funds have historically grown faster than cash savings, largely because returns compound on themselves. That growth comes with ups and downs, so money you need in the short term usually belongs in safer accounts. The study in this article found that confident people were far more likely to hold investments, which helps explain part of the net worth gap.
About the author
Contributing Writer, Wealthtender
Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine.
Karen provides copy editing and proofreading services, as well as content creation services, at her website KarenBanes.com.