How Are You Lying to Yourself About Money?

"I work hard, and I don't treat myself often."

"I could kick the bucket tomorrow (YOLO)."

"I'm getting a great deal!"

These are just some of the rationalizations we use to convince ourselves that it's OK to buy something.

Whatever legs this money lie stands on, it's usually used to soothe the sting of expensive purchases — those that aren't really essential — and perhaps items we know, deep down, we don't really need.

When faced with temptation, most of us lie to ourselves that we're great at resisting it. But, when was the last time you chose not to buy something you really wanted? When was the last time you made an impulse buy?

The average American spends at least a couple of hundred dollars a month on impulse purchases.⁴

And we're more likely to buy on impulse, and spend more, when we're stressed or we're looking for a new experience.⁵ That's probably why impulse spending shot up about 18% in 2020.⁴

Plus, the 374 million of us who are shopping with credit cards are probably spending more on the regular than we realize.⁶ The average credit card shopper spends about 10% more with their cards than they would with cash.⁷ And that's not even counting the cost of interest if the balance isn't paid in full.

Most folks focus on buying what we need and want now, and we tell ourselves we'll start saving for the future later. If we save anything at all, it's likely to be whatever we have left over.⁸

In fact, fewer than 1 in 6 of us are saving more than 15% of our income, and 1 in 5 aren't saving any money.⁸

No matter the reason, when we tell ourselves this money lie and put off saving, we're prioritizing the present over the future.

That can catch up with us on a "rainy day" or whenever we do start thinking seriously about retiring. By that time, there can be a lot of heavy lifting to play "catch up" with our savings — or it may even be too late.

The future can seem really far away when we're looking 10, 20, or even more years out. When we feel like we have a lot of room between now and then, it's easy to make excuses to not plan or save for it.

This money lie is an excuse for procrastination.⁹

It's the rationale we use when we have a hard time managing our negative feelings or uncertainties about our financial futures. And it makes us turn a blind eye to the years of interest that we lose out on when we don't plan.

Benjamin Franklin may have spoken best about the truth behind this money lie when he wisely said, "by failing to prepare, you are preparing to fail."

We tend to assign moral value to debt, thinking of mortgages and student loans as "good" debt, and considering credit card debt as "bad."

This money lie gets us to think the wrong way about debt. All debt comes with some cost and it's critical to understand how every loan affects our current and future selves.

Instead of focusing on whether debt is "good" or "bad," concentrate on the total cost of the interest over time (it's often higher than you think) and on deciding whether the loan is really helping you achieve your goals.

About half of us seem to already be on track with that thinking, saying that we expect to be out of debt within 1 to 5 years.¹⁰

While I think we can all agree that obsessive greed is wrong, it's not a bad thing to want more for you and your loved ones.

When we tell ourselves we shouldn't want more than we have, we agree to settle for less. And we may be tricking ourselves into thinking it's OK that we're not doing something (or enough) to improve our financial situation.

This money lie holds us back and can make it hard to improve our financial behaviors.

When we frame wanting more as a positive motivator, it can be easier to take the chances or do the work needed to get to that next financial level we may want.