“The reason I talk to myself is
The ways we lie about money are as countless as the ways to earn it. We lie to our significant other, our boss, our employer or employees, creditors, the IRS, and worst of all… ourselves.
Most of us were probably brought up in a family where no one talked about money. You probably didn’t know how much money your parents made, how much their mortgage payment was, or how many bills they had. Those things were for the “grown-ups” to worry about. Most people carry that attitude about money with them as they grow up and move into adulthood. We are told not to tell anyone how much money we make, who we voted for, or heaven forbid you talk about sex. I guess it is the rebel in me but I’ve always been open to discuss these topics in great detail. Many times, to my wife’s chagrin.
I used to own a mortgage company and people would try to lie to me about much money they make and how much debt they had. I would tell them “I’m like your lawyer, you need to tell me the truth and then I can choose which facts we share with the underwriters”. And now as a Realtor, I get a lot of the same lies from new and potential clients. People don’t want to admit what their actual budget is. The best example is when some drives by one of my ‘
As usual, after I wrote the first draft of this article, I googled the topic to see if there were any topics that pertain to this I had not thought of. But everything that comes up when you do a search for “lying about money” all pertains to lying to your spouse about money. I’m not going to go too far into that here because that is for someone else’s blog about relationships. I will the note that is definitely a big problem, and give you a statistic.
According to a survey by the National Endowment for Financial Education, one in three adults who have combined their money in a relationship admit to committing ‘financial infidelity’ against their partner. And 76 percent of those people concede that their deception has affected the relationship. – – so don’t do it! I have to admit, I learned something from this. I didn’t even know “financial infidelity” was a thing.
Ok, I touched on the ways people lie about money, and who they lie to. Now let’s talk about the worst person of all that get lied to. No, it isn’t Uncle Sam. It is YOU! People lie to themselves the most about money. Let’s touch on some of the lies you tell yourself because they are costing you more money that we can even calculate. These lies are not in any particular order. Just how they came into my mind as I pound them out on my keyboard.
The lies we tell ourselves can be broken down into two categories. The Positive and the Negative lies. This probably just depends on if you are a positive or negative person and how you frame the thoughts in your head. This is how I see them, and how I think they affect your life.
POSITIVE LIES
I can afford that (a.k.a. I deserve that)
This is the conversation you have with yourself to justify buying something you don’t need. It sounds like this “I’ve worked hard so I think I deserve a new set of golf clubs” or “I just got a raise so I’m going to get the new Louis Vuitton handbag I’ve been wanting”. Just because you can afford it doesn’t mean you need it or you should buy it. Take a lesson from my friend Paula Pant who has a blog called “You can afford anything, Just not everything”. You may very well deserve a new tennis racket, but you need to weigh out what your goals are and if it is worth putting off ‘This’ to buy ‘That’. If you are still trying to pay off debt or save for early retirement it probably isn’t worth it.
Other topics included under this heading are “I need a new car” This is another one that you really shouldn’t do until you are in like stage 7 of financial freedom. Don’t buy a new car! You might need a better
You need to ask yourself: Is this helping me achieve or delay my financial goals? Is this a need or a want? And where else could this money go? (like paying off debt or into an investment)
I have plenty of time to save for Retirement
This is the lie people tell themselves because saving isn’t fun. Buying stuff is fun. I’m not going to bore you with all the statistics about the time value of money and graphs that show you how retirement investing works over time. You can look it up if you haven’t seen them. My guess is that you already knew this. We just need a good kick in the pants sometimes to remind us what we are supposed to be doing. The earlier you start, the earlier you can retire. Financial Freedom isn’t difficult, but it takes work and some sacrifice.
Just put it on the credit card, I’ll pay it off at the end of the month
This is a particularly bad lie. People think they will put this and that and the other thing on the credit card and pay it off at the end of the month. But then the bill comes, and they didn’t keep track of how much they had charged. Then they just pay half of it and tell themselves “I’ll catch up on the balance next month”. And this has the potential for you to start lying to yourself for months or years until you have so much credit card debt you have no clue how you got to this position. But, somewhere along the way you probably told yourself another little lie like “I’ll get a second credit card to help me pay off the first one”. It is a vicious cycle. Here is a quote from a study about debt from Nerdwallet – “You’d think credit card users would know how much debt they carry. After all, statements come every month like clockwork. Yet consumers vastly underestimate or underreport how much they owe. Lender-reported credit card debt was 155% greater than borrower-reported balances in 2013, resulting in a difference of more than $415 billion”.
Negative Lies
I’m never going to be able to retire
This is the negative version of “I have plenty of time to retire”. The results are the same but the rationale is different. This is where you tell yourself that you already waited too long to save for retirement and now it is hopeless, so why bother. It is never too late to start saving, for retirement, or anything else for that matter. You are going to have to kick it into high gear. Depending on your situation you could look at options with higher Risk/Reward options. You can look at how people in the F.I.R.E. movement are saving 50-90% of their income. Or try to find ways of generating
I can’t afford a vacation
This is kind of like the negative version of ‘I can afford everything’. I know this one may seem confusing in the context of the rest of this article. But, not everything in life is about saving and pinching pennies. I think people need to travel and decompress and unwind. When I owned my mortgage company, I didn’t take a vacation for 10 years. I would occasionally fly home to see family, but that doesn’t count as a vacation. I didn’t really take vacations until I got married and my wife forced me to travel. And I still thought I was too important, and the world would end if someone couldn’t get in touch with me for 12 hours while I was in Peru and out of cell phone range. But the truth is, the world didn’t end, and the cost wasn’t really as much as I thought it would be. So take the vacation. Just do the research and try to stick to a budget. Even if you aren’t a person who does budgets and spreadsheets it is easy to do one for a vacation because most of your travel costs are paid upfront and you can shop them on the internet before you book them. You can actually do all of the legwork and figure out exactly how much a trip will cost before you book anything. Here is a breakdown of how much I spent on my trip to Peru for two weeks. __________
It was on sale so I saved XX% on this purchase
I put this in the negative section because it is a negative way of thinking. If you were already going to buy something and you took the time to do the research and get a coupon or some kind of discount, this doesn’t apply. I’m talking about how people justify buying the shoes because they were in the store and shoes happened to be 30% off. They still spent 70% more than they should have, because they didn’t need new shoes, and you really didn’t save anything. I used to be bad about this one. I also shopped off the clearance rack and would find a shirt on sale for $4. I’d say to myself “dang… a shirt for four bucks! Score!”. Then I’d get home and realize why it was on the clearance rack- it was ugly. A $4 shirt you never wear is not a good deal. And 50% jacket you didn’t need isn’t a good deal either.
There is a positive thing about getting discounts and savings. But, once again, it takes a little effort. You can set up a
I don’t think we will ever be able to completely stop lying to ourselves or to anyone else. It is engrained in our DNA. Ever since language was invented lies have existed. They helped to equal the playing field of survival. Before there was a spoken language I suspect the biggest
So don’t be too hard on yourself. The takeaway from this article is to learn to recognize when you are lying to yourself about money. Learn how to make good financial decisions. And learn to change your Retirementality.