7 Money Lies You May Be Telling Yourself
7 Money Lies You May Be Telling YourselfKathy Longo, CFP®, CAP®, CDFA Wednesday, 11 May 2022
No one sets out to tell themselves money lies, but beliefs can sometimes overwhelm facts when it comes to personal finance. Because money is such a big part of life, our wishes, hopes, dreams, and fears can sometimes make it hard to see the truth for what it is. Oftentimes, this happens without us realizing it, but the consequences can nonetheless be very real.
Money lies have a way of living well beyond when they should. Since we rarely talk about money with family, friends, or acquaintances, the lies can take on a life of their own and have a significant impact on our day-to-day lives.
Let’s take a look at seven of the most common missteps and misconceptions. If any of these money lies sound familiar, it might be time to set the record straight and start embracing better choices. Your financial health and future will thank you.
1. If I have this much, I’ll be happy
Have you ever said to yourself: “If my bank account gets up to $____, then I’ll finally be happy?” They say money can’t buy happiness, but it’s still one of the most pervasive money lies we tell ourselves when dealing with personal finances.
Setting a savings goal is a great idea but associating those milestones with an expectation that your problems will disappear is problematic. When we put too much emotion on a single number, the most likely feeling we will experience isn’t happiness — it is disappointment.
Of course, that doesn’t mean working toward a goal is fruitless. Studies show that simply making progress can give us a happiness boost. Instead of fixating on a single financial figure to make us feel a certain way, consistently growing your net worth is a better investment in your bottom line and your well-being.
2. Even if I can’t afford it, I deserve it
Viewing spending as a reward is natural, but spending more than you can afford won’t get you any closer to your financial goals. Do any of these justifications sound familiar?
“I deserve to treat myself — I work so hard.”
“Life is short, why not enjoy it?”
“This deal is just too good to pass up.”
There are countless rationalizations we use to convince ourselves that it’s ok to spend money on things or experiences that may not fit into our budget. Usually, our wants outweigh our logic, making extraneous purchases seem essential. Whatever the reason behind this money lie, the only way to build wealth is to stop letting yourself believe it.
SEE ALSO: Five Generational Money Taboos You Should Ignore
3. I am stronger than my impulses
Impulse buying – that is, purchasing something without planning to do so beforehand – is all too common. Advertising, social media, and savvy marketing are all geared to play into our natural temptation. The average American spends at least a few hundred dollars a month on impulse purchases, and impulse spending shot up by 18% in 2020.
Stress plays a key part in impulse purchasing — it can give our bodies a dose of dopamine that makes us feel better in the moment. Keeping your eyes on the long term can help counteract the urge. Stick to a list, give yourself wait time between seeing what you want and taking action, and spend some time thinking about what you’re feeling when you buy impulsively.
4. I’ll save more in the future
Living in the moment isn’t a bad thing, but when we tell ourselves we’ll save more in the future, we cut into our opportunity to save. The fact is, fewer than 1 in 6 Americans are saving more than 15% of their paychecks, and 1 in 5 aren’t able to save anything for emergencies or retirement.
This money lie, that it’s ok to prioritize the present over the future, is a serious misconception. Saving even small amounts now can lay the groundwork for the golden years ahead. It’s much harder to play catch up with our savings if we start too late.
5. The future is far away
The future can seem like it’s an eternity away when you’re looking decades ahead. However, putting off financial planning for a future date is procrastination, plain and simple.
Many of us feel uncertain about the future, and it can be easier to simply ignore that discomfort. When we turn a blind eye to what’s to come, though, we lose out on a lot of interest and earning potential. If you find yourself believing this money lie, remember the immortal words of Benjamin Franklin, who said “By failing to prepare, you are preparing to fail.”
SEE ALSO: Building Your Financial Confidence
6. Some debt can be good
Thinking of debt as good and bad — mortgages and student loans are worthwhile; credit card debt is never a positive — can get us into trouble. This money lie sets up a false dynamic that can trick us into taking on more debt than we should.
Yes, some debts are better investments than others. The fact is, though, that all debt comes with some cost, and it’s important to understand how every loan has an effect on our today and our tomorrow. Instead of putting your focus on the moral implications, try to concentrate on the total cost of interest over time. Does the loan really help you achieve your financial goals?
7. Wanting more will get you nowhere
Greed isn’t good, but wanting more for yourself, your loved ones, and your future can be a positive motivating force. When we believe we shouldn’t want more than we have, we are essentially tricking ourselves into thinking it’s ok to settle for less. That mindset makes it particularly hard to improve your financial situation and behaviors.
As long as wanting more doesn’t become an overwhelming impulse, it can make it easier to do the work necessary to take your finances to the next level.
Leave Harmful Money Lies Behind
The truth: honesty is the key to creating good financial habits. When we are able to recognize our misconceptions, we can change our mindset to start taking positive steps toward building wealth and ultimately reaching our financial goals.
Want more straightforward financial advice to improve your bottom line – and your relationship with money? Check out the Flourish Financially with Kathy Longo podcast!
About the Author
Kathy Longo, CFP®, CAP®, CDFA
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.