My friend Rocco works for a high-end tailor. A big part of their business model is the idea that a nice-fitting shirt, perfectly tailored pants, or an Italian silk suit will not only look good, but will objectively improve your life.

But how?

The engineer and humanist in me would balk at the idea. I have the same brain and heart in a Wal-Mart sweatsuit as I do in a Brioni. Judge me not!

But when I look at the image below – same exact guy – and ask, “Which one has a better life?”…there’s a response from deep in my monkey brain. It’s Mr. Pinstripe!

Of course, for all we know, the left version of Mr. Pinstripe might be perfectly happy and wouldn’t change a thing. I’m not so confused as to suggest that you can’t be happy in sweatpants (I certainly am on a nightly basis).

But in Rocco’s defense, I am anecdotally positive (there’s a turn of phrase for you) that when I’m in a nice work outfit (good slacks, a sleek button-down shirt, and a sportcoat) people treat me differently. Specifically, they treat me better. And because of that, I feel better (I’m only human).

Or, perhaps, because I feel better, others treat me better. It’s a chicken-and-egg problem, for which the answer doesn’t matter.

Whatever the case, I want to highlight today that confidence has value, both subjectively in various facets of life and objectively in your personal finances.

Confidence vs. Arrogance

“But I don’t want to come off as arrogant…”

Nor should you! Arrogance and cockiness are ugly. We know it when we see it, and we know we want to avoid it. But I contend that confidence is wholly different from cockiness or arrogance.

I’d argue that “confidence” is a pragmatic assessment of reality. It’s a sensible evaluation of yourself.

Arrogance is neither pragmatic nor realistic. It’s an alienating overestimation.

Confidence says, “I’m comfortable in my skin.” Arrogance screams, “I’m (loudly) confused as to what skin I’m actually in.”

But what exactly does confidence look like?

• Confidence is a conviction that you can meet life’s challenges and your willingness to act accordingly. 
• …is an internal locus of control
• …is self-trust and self-acceptance
• …is awareness of strengths and weaknesses as well
• …is setting realistic expectations and goals, communicating assertively, and handling criticism.

We’ve all seen confidence in our lives. It’s another one of those ideas where “we know it when we see it.” Sometimes it’s loud, but it’s just as likely to be quiet. Sometimes, it’s funny; other times, it’s serious, firm, or stoic.

But why is confidence so important to merit an article on a personal Finance blog?!

What is the Value of Confidence?

Humans find confidence to be one of the most attractive features in others. This is true for romantic partners, Platonic friendship, and Employment. When you give people cues that you believe in yourself, you signal that you’re worth their belief as well.

I’m sure there’s an evolutionary rationale baked in there, too. We want to associate with people who believe in themselves as winners. Maybe they’ll make us winners too?! This brings us back to cockiness and arrogance; both are signals (loud ones), and are frequently confused as signals of fitness and strength.

Confidence has a financial value, too.

A 2023 Dutch study’s findings “provide evidence for theories that consider self-esteem as both a source and a consequence of personal earnings.” In other words, sometimes more confidence leads to more income, and sometimes more income leads to more confidence. In the long run, it’s a virtuous cycle.

I’m not sure the science supports this quote, but when I think of professional confidence, I’m reminded of this Jim Rohn quote:

We want confident leaders. That confidence is an accumulation of Rohn’s first statements: strong, kind, bold, thoughtful, humble, proud, and humorous. When you think of the best leaders in your life, I’d wager they possess most of these qualities.

But more importantly, we should each strive for a modicum of “financial confidence” in our lives. Rather than a “sensible evaluation of yourself,” my idea of financial confidence is a “sensible evaluation of your finances.” What I mean is:

• The knowledge you can meet life’s financial challenges and your willingness to work hard.
• The understanding that your emergency fund and savvy insurance status prevent many possible avenues of failure. You can’t fail!
• An internal locus of control. You can improve many facets of your financial life.
• Knowing you’re not financially perfect. Awareness of those imperfections is the first step toward improving or mitigating them.
• Faith that your long-term Investing mindset will lead to a successful financial plan

The cocky investor shills Dogecoin as a cure for your ills. The arrogant investor stokes fear of the impending doom they’re sure is around the corner. The confident investor ignores the noise and stays the course.

The cocky spender is out over their skis. The arrogant spender criticizes your perceived frugality. The confident spender knows wealth is what you don’t see.

The Article is Ending Now.

Is that headline assertive enough for you?

Seriously, you don’t need a perfect suit to be confident. Speaking for myself, I’d wager my primary source of confidence lies deep within. I know what my brain can and can’t do, and I’m comfortable communicating that with others.

That said, I feel the difference when I’m looking good! No doubt. And that confidence matters!

Whether you’re looking to improve your general confidence or financial confidence, I think the wise words of the Oracle at Delphia ring true: temet nosce, or “know thyself.”

You can meet life’s challenges and act accordingly. You’re in control. You know your strengths and weaknesses. You can set realistic goals, you can handle criticism, and you’re assertive.

You got this.

Thank you for reading! If you enjoyed this article, join 8000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.

-Jesse

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Jesse Cramer Writer & Financial Planner

Jesse Cramer is the writer of The Best Interest blog, the voice behind The Best Interest Podcast, and works full-time as a fiduciary financial planner for Cobblestone Capital Advisors in Rochester, NY.