How Imposter Syndrome Impacts Your Finances (and How to Deal With It)

Coined by researchers in the late 1970s, imposter syndrome initially referred to “an internal experience of intellectual phoniness,” despite any accomplishments that indicate otherwise. In other words, successful people who fear their achievements are due to luck, rather than ability or talent. Now, however, this term casts a wider net and is used to describe an individual's doubts about their abilities, talents, and qualifications. If you experience imposter syndrome, you may feel like you don’t deserve your accolades, that you only managed to succeed because of luck or deception, or that you’re a fraud who’s bound to be exposed eventually.

In a review of 62 studies on the subject, researchers discovered that anywhere from 9% to 82% of people experience feelings of imposter syndrome at some point or another. Though anyone can deal with imposter syndrome, a growing body of research suggests its prevalence is higher among women and people of color. Much of the discussion surrounding imposter syndrome focuses on professional and academic spheres, but it can also manifest itself in other areas of life, including your finances. 

Financial imposter syndrome occurs when you have doubts about your ability to manage your finances. Maybe you think you’re bad with money or that personal finance topics like investing or even banking are too complex for you to learn about. Whatever the case may be, it’s vital not to let financial imposter syndrome rule how you handle your money — lest you and your finances suffer the consequences.

Financial Impacts of Imposter Syndrome

If you aren’t careful, imposter syndrome can devastate your finances. It may compel you to avoid facing things head-on, which isn’t a viable strategy for long-term financial health. You may feel you aren’t capable of building or managing wealth or that you are doomed to work for a salary instead of growing assets strategically. Best case scenario, you’ll fail to improve your finances; at worst, you could encounter serious issues and miss out on ways to maximize your wealth.

Indirect Effects

In reality, the effects are likely to fall somewhere in the middle. Some may be indirect, such as not asking for a raise or applying for a promotion at work. You may not make sound investment decisions, failing to diversify your investment portfolio or missing out on lucrative opportunities altogether. It could be even more straightforward, such as not contributing to your savings or putting anything away for retirement. You may not feel these effects now, but you likely will in the future.

In other instances, the impacts may hit closer to home, such as being unable to buy your first house, not getting a much-needed new car, or not treating yourself to a special vacation. These things may not hurt your finances, nor are they necessary to live happily and comfortably, but your avoidance could prevent you from reaching your goals. 

Negative Effects

In some instances, being passive with your money can actively harm your finances. If you’ve taken on debt and haven’t made a plan to pay it off, it will keep accruing interest and cost you more money. If you default on that loan or account, it could wreak havoc on your credit score, drive up interest rates on future loans, and make your financial life difficult for years to come.

Further, money isn’t static; it’s constantly in flux. Between shifts in the stock market and changes in the housing market, it’s natural for the economy to ebb and flow. But if the housing market crashes or the stock market plummets, it could have widespread and enduring consequences for everyone. Without full control over your finances, you won’t be in the best position to weather the storm.

Warning Signs of Financial Imposter Syndrome

Whether you already suspect you’re experiencing financial imposter syndrome or simply want to avoid these potentially negative consequences, it’s vital to understand some of the most common warning signs. Financial imposter syndrome can manifest differently for each person who experiences it, but common symptoms and examples include:

• Getting stressed about financial decisions or chores, such as paying bills
• Feeling like you can’t recover from previous financial errors
• Refusing to discuss finances with other people
• Avoiding asking questions about or researching financial topics
• Procrastinating on significant but necessary purchases
• Feeling as though you didn’t earn your money, despite doing so
• Having negative or shameful feelings about money
• Feeling like you don’t deserve financial security

By identifying what financial imposter syndrome feels and looks like, you can then take steps to manage and overcome it.

Tips for Managing Financial Imposter Syndrome

Financial imposter syndrome is difficult, but certainly not impossible to manage. It won’t happen immediately, but with the proper knowledge, some patience, and a bit of effort, you can overcome imposter syndrome and prevent it from further hurting your finances.

Talk About It

Even if it’s embarrassing or hard for you, discuss your feelings with someone you trust. It doesn’t matter who you talk to — it could be a friend, a family member, a mental health professional, or a financial advisor — it just matters that you do it. By acknowledging the issue, you can start to confront and take control of your finances.

When you talk about financial difficulties with another person, you can see the situation for what it is and get advice on how to deal with it. You may also feel relieved to no longer carry this burden on your own or even discover that someone else you know is experiencing similar feelings.

Learn to Notice It

Identify what financial imposter syndrome looks like for you, then do your best to notice it. Whenever it arises, acknowledge that feeling or line of thinking, and try to correct it. It’s fine for old behaviors and thoughts to creep in, and if they do, it doesn’t mean that you’re failing at overcoming imposter syndrome.

Come up with a strategy to cope with these feelings. Celebrate your efforts, not just your achievements. Say positive affirmations to remind yourself of your financial worthiness. Create a catalog of your accomplishments, as well as what you did to make them happen. Use whatever strategy you need to and be patient with yourself while you discover the right one for your needs.

Educate Yourself

Take some time to learn about personal finance. It can be overwhelming at first, especially if you believe that you don’t have the mind for money, but it isn’t nearly as complex as it seems. The hardest part is getting started, but it gets progressively easier as you go.

Start small with essential topics related to budgeting, saving, loans, credit, cards, and retirement. Read books, listen to podcasts, and find helpful blogs. Ask other people what resources they’ve found beneficial in their quests to become financially literate.

After you have the basics down, look for educational resources about real estate, investing, and other, more “advanced” topics. Continue to learn about new things that relate to your financial goals and interests, even as you get comfortable with more complicated subjects.

Cultivate Healthy Financial Habits

Apply what you’ve learned to your finances. Start creating healthy financial habits that will serve you in the short- and long-term and help you reach whatever goals you’ve set for yourself. This includes:

• Making and sticking to a budget
• Creating an emergency fund
• Saving for retirement
• Building credit
• Paying off debt

It may take a while to form these new habits — experts estimate that it can take anywhere from roughly two weeks to eight months to form a new habit — but in time, you’ll discover what works well for you and your needs.

Enjoy Financial Security

Finally, let yourself enjoy your hard work. You shouldn’t live above your means, but don’t hesitate to treat yourself from time to time. Personal finance isn’t all business; spend some of your money on things that make you happy and improve your quality of life.

Financial security can be hard to achieve, and it’s an accomplishment worth celebrating. Understand that your own efforts got you here, not luck or circumstance and that you do deserve your newfound financial freedom.