How Money Affects Self-Esteem

Money can affect self-esteem, but basing self-esteem on external factors, like your financial situation, is risky. Our external circumstances can change wildly and unexpectedly. So when your opinion of yourself is wrapped up in what you have or don’t have – and you compare these externals to others – your self-esteem becomes very unstable. You become easily crushed. Money is one of those external factors that many of us latch onto for a sense of validation. And money can interact with our self-esteem in a variety of ways.

Poverty and Low Self-Esteem

People living in poverty often experience low self-esteem.¹ Being unable to afford food and other essentials can make people feel that they are failures. They may internalize negative stereotypes that they must be poor because they are incompetent and deeply flawed as people. This low self-esteem can lead to a lack of confidence and a sense of hopelessness.

Wealth and High Self-Esteem

Associating wealth and money with self-esteem can be problematic for a number of reasons. Firstly, if you choose to pursue wealth in the name of self-esteem, you may make decisions in life that don’t align with your authentic passions, values, and goals. You will pursue a career because it will provide you with a lot of money, even if you hate the job and find it boring, uninspiring, uncreative, and totally at odds with what you’re like as a person.

Secondly, if you end up losing money – say, from job loss or a business failure – then you could lose all of your confidence. Obviously, it’s completely normal to worry about money and paying bills in these kinds of situations, but you need a strong, stable self-image in order to recover and get back on your feet.

Thirdly, when you let money dictate how much you value yourself, you really won’t value yourself very much. Deep down, we all want to feel that we have traits and qualities that give us a sense of self-respect and confidence. But the amount of money in our bank account – or other signs of wealth – isn’t really enough to give us healthy self-esteem.

Lack of Money and Self-Esteem Affects Relationships

If you’re on a low income, this can affect your opinion of yourself when it comes to relationships. This is especially true for men, who feel expected to pursue status,² which they may associate with earning a lot of money. A man may view himself negatively, as unattractive, because he may not be able to afford an expensive apartment, car, holiday, or meal out.

For both genders, however, lacking the money to buy certain things can impact self-esteem. It becomes a whole lot easier to date confidently and form a healthy relationship with someone else when your self-esteem is based on your personal attributes.

Comparing Your Financial Situation to Others

Financially-based social comparisons will trip you up ("Stop Comparing Yourself to Others"). If you associate wealth with happiness, success, or virtue, then it can be tempting to compare yourself to friends, acquaintances, siblings, or other family members, and put yourself down if you’re earning less than them.

When you compare yourself to others, this can get in the way of you fully realizing your potential and expressing your very best qualities. For example, you may decide to pursue a career in the name of passion, regardless of how much you will earn. Yet even if you’re passionate about what you do and it brings out your best abilities and qualities, the fact that you earn less compared to others doing what you’re doing – or compared to close friends – can make you doubt yourself.

This is why it’s important to value and appreciate your decisions, life choices, and personal achievements in and of themselves. Once you work on doing this, your self-esteem won’t be so swayed by money and the lives of others.

See also:

• How to Stop Comparing Yourself to Others
• Stop Comparing Yourself to Others to Improve Self-Esteem
• Comparing Yourself to Others Can Complicate Coping

Sources

1. Foster, D. "How Being Poor Can Lead to a Negative Spiral of Fear and Self-Loathing". The Guardian. June 2015.
2. Mahalik, J. et al. "Development of the Conformity to Masculine Norms Inventory". Psychology of Men and Masculinity. March 2018.