How Your Financial Identity Is Formed, with Dr Ylva Baeckström

Money decisions are often presented as logical and rational. Save more, spend less, invest regularly, stick to the plan.

But real life is rarely that simple.

In this episode of The Wallet, Emilie Bellet speaks with behavioural finance expert, psychotherapist and King's College London senior lecturer Dr Ylva Baeckström about the emotional side of money, and how our financial identity is shaped long before we open our first investment account.

The conversation explores childhood experiences, confidence, investing behaviours, gender stereotypes, financial advice, and why knowledge remains one of the most powerful tools for building wealth.

Listen on Spotify | Apple Podcasts

Below are the key themes from the episode.

Your relationship with money often starts in childhood

Many of our financial habits are formed long before we start earning money.

The way money was discussed, managed, or avoided within the family can shape how we think about spending, saving and investing as adults.

Some people respond by becoming highly engaged with money. Others avoid financial decisions altogether. The important first step is recognising that these early experiences may still influence how you approach money today.

As Ylva explains, understanding where your beliefs come from can help you avoid letting them hold you back.

Avoiding money is often rooted in anxiety, not laziness

For many people, the biggest obstacle is not a lack of intelligence or motivation.

It's anxiety.

Fear of making mistakes, losing money, or looking uninformed can stop people from checking their bank account, creating a budget, or investing for the first time.

Ylva's advice is simple: start small and practise.

Talk about money with trusted friends. Ask questions. Listen to podcasts. Read articles. The first conversation is often the hardest, but the barrier becomes lower each time.

Knowledge matters more than confidence

Confidence is often presented as the missing ingredient when it comes to investing.

Ylva argues that knowledge is usually the bigger issue.

Many people never learned about money at home and never learned about investing at school. As a result, they reach adulthood knowing they should be investing but not knowing where to start.

Rather than waiting to feel confident, focus on learning.

Knowledge creates confidence, not the other way around.

Girls start falling behind financially at a surprisingly young age

Research discussed in the episode shows that by age 16, girls often score lower than boys on measures of financial knowledge, confidence, willingness to discuss money, and risk tolerance.

Ylva's research has also found evidence that baby boys are more likely to receive financial gifts than baby girls.

These differences emerge early and can influence financial behaviour throughout adulthood.

Closing the gender wealth gap requires more than encouraging women to invest. It requires improving financial education and making money conversations normal from a young age.

Women were historically excluded from finance

Women are often told they lack confidence when it comes to money. The historical context matters.

Women in the UK could not open a bank account without a male signature until 1975. The first woman became a member of the London Stock Exchange only two years earlier.

For decades, financial systems were built without women in mind.

According to Ylva, these messages still shape how many women feel about investing today.

Women are often excellent investors

One of the strongest themes from the conversation is that women are not bad investors.

In fact, numerous studies show that women often outperform men over the long term.

Women typically trade less frequently, take more considered decisions, diversify more effectively, and focus on long-term outcomes.

The challenge is not investment ability. The challenge is getting started.

The real risk is often not investing

Many people think of investing as risky.

Ylva argues that for many women, the bigger risk is staying on the sidelines.

Holding cash for decades means inflation gradually erodes purchasing power.

Investing does not have to be complicated. For many people, a simple diversified fund held consistently over time can be enough to build long-term wealth.

As Ylva puts it, the real risk is often not investing at all.

Female financial advisers can make a significant difference

One of Ylva's most fascinating research findings relates to financial advice.

Her studies found that women invest significantly more when they work with female financial advisers.

Female clients reported feeling more knowledgeable, more confident, and more comfortable taking appropriate investment risk when advised by women.

The findings suggest that representation matters, not just for visibility but for outcomes.

AI may help reduce some financial biases

Ylva has also been researching the role of AI in financial advice.

Her findings suggest that AI systems are often less gender-biased than human advisers when making investment recommendations.

However, AI also tends to recommend lower-risk portfolios overall, which could affect long-term returns.

While AI has the potential to improve access to financial guidance, important questions remain around adoption, trust, and how these tools will be used in practice.

We need new ways of teaching financial education

A recurring theme throughout the conversation is that traditional approaches to education are no longer enough.

Children are learning differently. Technology is changing how information is consumed. Financial decisions are becoming more complex.

Ylva is currently researching new educational approaches that could improve financial knowledge while helping reduce gender gaps from an earlier age.

The goal is not simply teaching facts.

It's helping people develop the confidence and capability to take action.

Final Thoughts

If there is one message from this conversation, it is that money is rarely just about numbers.

Our financial decisions are shaped by family experiences, social expectations, confidence, identity, and the stories we tell ourselves about what we are capable of.

The good news is that these beliefs are not fixed.

By understanding where they come from, learning more about money, and taking small practical steps, we can build healthier financial habits and greater confidence over time.

Disclaimer: As always, this episode and the content available on Vestpod.com are for educational purposes only and do not constitute financial advice. The value of investments can go down as well as up, and you may get back less than you invest.

Resources

Connect with Ylva on LinkedIn

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