Believing that a person is in themselves capable of achieving a goal is important to them actually accomplishing it. Until they feel that they can, any goal will just be a theory somewhere out there. Studies have shown that capability goes beyond just believing that a person could achieve their goals: it extends into their interpersonal life style, and what their personal reasons for existing are. Thus, a whole mindset change is required for financial self-efficacy.
- Financial self-efficacy is a term that is used to describe how well a person thinks that they can handle their own finances and advise themselves.
- With this attribute, we discover that believing is actually more important than knowledge. If you believe you will save money, that is more powerful than just knowing how.
- While there needs to be more research done, there has been some research done when it comes to how this area influences women and credit.
“Similarly, it’s important to emphasize that self-efficacy does not refer to one’s skills or knowledge. An individual could have objectively high levels of financial skills and knowledge, yet still lack the self-confidence and financial self-efficacy needed to engage in behavior that capitalizes on this knowledge.”
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