Financial planning requires sharp decision-making skills for the judicious use of money. You could jeopardise your finances if self-doubt and anxiety cloud your judgment. For instance, decisions about savings and investments must be realistic depending on your income, preference, experience and, above all, your risk-taking ability to generate positive results. Some people may want to avoid taking risks due to self-doubt. Although a little bit of self-introspection is not bad, excessive self-doubt or having an Imposter Syndrome could be self-destructive.

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Imposter Syndrome, a psychological term, which describes a constant feeling of self-doubt. For instance, it may creep up when a person does something new or takes up a new responsibility.

According to a Harvard Business Review article in 2022, some one-third of young people and 70 per cent of the rest are likely to experience Imposter Syndrome at some point. It says those suffering from the syndrome feel an inadequacy about themselves. They think people have an exaggerated view of their abilities and constantly downplay their achievements. They also tend to obsess over minor mistakes and work twice as hard to be perfect.

How Can It Affect Financial Decisions?

Experts opine that it can affect one’s financial decision-making process, such as asking for a salary hike, investing in a new asset, or starting a business. Self-doubt can sabotage their financial dreams by reducing their risk-taking appetite or completely ignoring high-risk high-return assets.

Says Bhawna Chaddha, a Delhi-based psychologist: “Imposter syndrome is related to a lot of doubt and insecurity and starts with judging your own decisions and capabilities. That particularly may affect the way you are making your choices or the way you are making your decisions. It’s not just decision making, but it might affect other processes like problem-solving, confidence level, risk-taking, and the financial decision making becomes a part of it”.

Studies show that the fear of losing can affect peoples’ behaviour so much that they can’t trust even their own decisions. The functions that require higher cognition, like making decisions, taking risks, and solving problems, need positive cognitive functioning. However, imposter syndrome leads a person to think more pessimistically to the extent of ignoring even the person’s successes in the past. “These people are doing good, they are successful in their life, but they live with a lot of doubt. So, yes, it definitely can impact people’s financial decisions”.

Is It Possible To Overcome Imposter Syndrome Completely?

Chaddha highlights that imposter syndrome is common among people vulnerable to anxieties, mainly affected by the ecosystem, but sometimes it could be ego-driven. She adds, “I would not say that you can’t get cured of it, but it can be re-occurring. If people can get out of it, the chances are very high that they may return to that particular syndrome”.

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However, one may follow a few tips to reduce the symptoms and improve cognitive abilities. One can remind oneself of past successes to get reassurance of their abilities and self-worth. Writing in a journal or talking to a family member or a close friend about the issue might also help. Trying something new, no matter how small it seems, can also help foster positive thinking.