There are two ways to increase our Confidence Bank Account balance: 1. Earn more or 2. Spend less. A skilled investor chooses investments that yield high returns (earning more) while simultaneously minimizing losses (spending less).  This is why natural optimists are natural confidence investors: They focus on positives instead of negatives, increasing the value of their accolades while minimizing the confidence withdrawals of their failures. In this way, natural optimists start out with a huge advantage in life. But while our temperament certainly plays a role, confidence investing can be learned by even the most pessimistic among us.

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To spend less in the confidence economy is to care less. This is not the same as being careless or indifferent; it’s about having priorities—focusing our energy on the what’s important. Learning to have an optimistic outlook leads us to focus more on the positive sides of life. In other words, positivity breeds gratitude, and gratitude leads to huge confidence savings.

In the confidence economy, negativity is what constitutes our spending—either through criticism, self-doubt, scandal, or otherwise. Yet many of us continually invest in negative thinking, negative speech, and negative actions. Some of us even make our living by finding faults in others (ex. dentists). Being grateful, on the other hand, is equivalent to using coupons and shopping on sale. By regularly focusing on our blessings, we decrease the costs of our negativity.

To be clear, there will always be some level of negativity to life. A positive temperament does not protect us against making poor confidence investments, but it can make us more resilient. As renowned psychologist, Albert Bandura, writes, “The important matter is not that difficulties arouse self-doubt, which is a natural immediate reaction, but the speed of recovery of perceived self-efficacy from difficulties.” Or to quote another highly academic source, “I get knocked down, but I get up again. You’re never gonna keep me down” (Chumbawamba, 1995). Skilled confidence investors know how to cut their losses, focus on the positive, and move forward (rather than dwelling on the past). They also know where to invest.

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Earning more confidence is a matter of investing in high-yield assets. Everyone’s preferences and values are unique; therefore, there are no universal “right” investments. But there are clear differences between putting too much focus on our appearance and social media followers while neglecting to develop useful life skills and meaningful relationships. In economic jargon, we want to invest in confidence assets not liabilities. And as with any good investment account, diversification helps protect against the downside.

To quote television personality, Judge Judy, “Beauty Fades, Dumb is Forever.”  Like the depreciation of a new car, physical appearance and other confidence liabilities are depreciating utilities—vehicles to get us from point A to point B. This is not to say we shouldn’t invest in confidence liabilities. They can certainly create value in the short-term. Many of us even use our physical attributes as leverage to achieve long-term ends (ex. Sugaring, as in “sugar daddy” relationships). But over-investing in liabilities can lead to a lack of confidence later in life. Everyone ages, and when we do, we need confidence assets in our portfolio.

Unlike confidence liabilities, assets compound over time. Developing valuable skills, individual passions, meaningful work, friends and family—these types of investments have the ability to grow exponentially. Investing in deep relationships, for instance, allows us to be comfortable with who we are and create a safe and secure environment to build our confidence wealth.

But meaningful relationships do not always yield short-term confidence. In fact, our closest friends and family can often be so brutally honest that they crush our confidence. That’s when we focus on the positives of life, put short-term criticism into perspective, and move on. That’s when we learn to be skilled confidence  investors.

SUMMARY

1. C = pF – nF , Confidence = Positive Feedback – Negative Feedback
2. C = pK(pF) + nK(nF), Confidence = (Positive Disposition Coefficient  x  Positive Feedback) – (Negative Disposition Coefficient  x  Negative Feedback)
3. pK [negative demeanor] < 1 < pK [positive demeanor], If Positive Disposition Coefficient is >1, consistent with a Positive Demeanor (enhancing positive feedback)
4. nK [positive demeanor] < 1 < nK [negative demeanor], If Negative Disposition Coefficient is <1, consistent with Positive Demeanor (minimizing negative feedback)

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*Disclaimer: The Confidence Bank Account is in no way scientific, mathematically sound, nor inclusive of quantitative data, so please sit back, relax, and enjoy the thought experiment.