How financial imposter syndrome could be draining your finances

If you worry that you are no good with money, or feel financial matters are too complicated, then you are not alone. A new study from wealth manager Quilter has found that more than three million adults are suffering from financial imposter syndrome – a psychological state that manifests itself in chronic doubt about financial skills, achievements and entitlements.

The study was conducted in partnership with financial psychotherapist Vicky Reynal, who we spoke with to expand on what the phenomenon is and how to overcome it.

What is financial imposter syndrome?

“Financial imposter syndrome is a psychological pattern in which we doubt our own financial abilities,” Reynal says.

“Alongside the self-doubt, there’s also fear of being found out as a fraud, even if we were quite successful financially. So what you’ll find is that people with financial imposter syndrome tend to attribute their success to either luck or others helping. It’s all external things, then when they have financial failures or setbacks, they blame it all on the internals – it’s their fault,” she says.

“This is because they believe they’re not good enough financially.

“There’s a lot of self-doubt that stops them from feeling like they can take charge of their finances. It can be holding a lot of people back from taking steps to make a financial plan to make their money work for them, which can be a real problem, both practicality and emotionally.”

What is the usual cause of financial imposter syndrome?

Reynal says one of the most common reasons is that we’re not taught about money growing up. “It’s something we have to find our way around really quickly as adults, without the tools or the benchmarks to navigate whether we’re doing well enough or if we’re on the right track,” she adds.

“In the Quilters research, they found that 24% of people earning more than £80,000 feel like financial frauds, so it can definitely affect people who are earning good salaries. It’s more about confidence rather than capability,” she says.

Reynal adds that one of the signs to look out for is if you’re taking a very passive stance around your finances. “Maybe you find yourself faking your financial knowledge because you’re worried that other people will expose you as a fraud and you’re doubting your own skills,” she says. “The impact of this can be really difficult, because when we avoid dealing with them, we kind of sit with this base level of anxiety.

“We know we should be doing more, but we’re not doing it. Then there’s the actual cost of not starting to invest early and not making a plan early on in life for our money. What I find really interesting in this research is to witness something I’ve also seen in my consulting room – that is the stereotypes people carry around about who financial advice is for.

“A lot of people, particularly when they come from maybe less-privileged backgrounds, or from family with not a lot of money, think financial advice is only for rich people. So they don’t do anything with their finances and are kind of living pay check to pay check,” she explains.

“However, everybody deserves to feel confident about money, no matter how much of it they have.”

How can people overcome imposter syndrome when it comes to money?

Reynal says the first thing is to notice your internal dialogue. “If you notice that you continuously blame yourself for what goes wrong, and any success you have you attribute to others, that’s one sign that you have imposter syndrome, but it’s also the first step in changing it. Catch these thoughts and gently challenge them,” she says.

“The second would be to be careful with comparisons.

“Sometimes we go around looking for confirmation that we’re bad with money and everybody else is doing well. We see a very distorted version of reality when we might see people buying expensive things and think ‘they’ve made it financially’ when actually, it could be debt fuel spending. So make sure you’re comparing yourself fairly,” she adds.

“Thirdly, get hold of your sense of agency. I think this is the most important one and the thing is we can all make a plan from tomorrow. We can all take the first step in doing something different, but that can only happen if we take control of our finances and stop saying vague things like ‘I’m bad with money’ or ‘I’m never going to be good with money’ because those things don’t help us get better.”

Reynal adds if you say that you actually want to learn to invest, or learn how to make a savings plan that’s concrete, that is more helpful. “Finally, ask questions,” she adds.

“Nobody has it all figured out and actually, when we ask questions, not only do we get some good ideas from other people, but we also find out that other people have doubts the same way we do, and they might have questions as well. It costs nothing to have an initial consultation with an advisor.”