Self-Efficacy: How Believing in Yourself Can Make You Wealthy

In this series, we’re going to make talking about money fun, by bringing in some psychology.

What is self-efficacy?

Self efficacy:

An individual’s belief in their capacity to achieve a task or behavior.

Here’s an example. Have you ever played a sport or learned a new subject, and found that you were hitting a road block? Part of what allowed you to get over that road block is believing you could. Obviously you also had to put the work in, just believing isn’t enough - but if you didn’t believe you could do it, why waste the effort?

Self-efficacy in simple terms is our confidence in ourselves - it helps us feel a sense of control over our environment and motivates us to continue.

Do I have self-efficacy? 💭

When you face challenges, what normally happens? Do you keep pushing, or are you quick to give up? If you’re the first, you probably have high self-efficacy. If not, try to model after our good pal Thomas the Train (I think I can, I think I can!).


Does self-efficacy really work? 🤔

Psychologist Albert Bandura did a good amount of research on how self-efficacy impacts your ability to actually achieve your goals, and he found that it can impact everything from our psychological state, behavior, and motivation. As a result, self-efficacy is key to understanding how we respond to certain situations, and ultimately succeed in those situations.

When you believe, you are far more likely to succeed.

People with a strong self-efficacy:

  • Develop deeper interest and commitment in their activities
  • Recover quickly from obstacles
  • View challenging problems as puzzles to overcome

People with a weak self-efficacy:

  • Avoid difficult tasks, and believe they are beyond their capabilities
  • Focus on personal failings
  • Lose confidence quickly after failure

How can I develop self-efficacy? 🏋️

Self-efficacy is developed in 4 ways, according to Bandura:

  1. Mastery Experiences - when you are able to accomplish a difficult task, it gives you more confidence to do it the next time
  2. Vicarious Experience - you gain confidence by having a role model
  3. Social Persuasion - getting a hype (wo)man to tell you how great you are
  4. Emotional States - how mentally and physically healthy you are drives self-efficacy

Let’s practice some self-efficacy ✅

You may have just started your debt payoff journey, or you may be part of the way through. Either way, self-efficacy is an important part of sticking to your process. Remember to tell yourself how capable you are of achieving this goal, every baby step will bring you closer and give you more confidence. The best way to practice is to sign up for the Debbie app, which gives you a free money psychology course with exercises and monthly financial goals. The best part is, it rewards you for meeting them!

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