• Steve Martin

Money Lies (We Tell Ourselves) Part 1


How good are you with money?


About 40% of people say they’re better with money than most people. About 1 in 8 say they are more financially savvy than everyone they know.¹


Most of those people are lying to themselves.


And that’s just one of the money lies we can tell ourselves without even realizing it.


Sometimes, the money lies we tell ourselves are excuses to spend or rationalizations for poor financial habits. Other times, we may be using them as cover to hide our negative feelings or uncertainties about some part of our financial life.


Do you think you’re telling yourself the truth about money?


We may think we know the facts about our finances. But our beliefs can often overshadow the facts. Our wishes, hopes, and fears can tip the scales away from the truth. This makes it easier for us to believe what we want to about money — and it can happen without us even realizing it.²


And since most of us rarely talk about money with our friends and family, the money lies we tell ourselves stick around. They can change the way we think and act when it comes to finances³ and can lock us into destructive beliefs and reinforce poor financial habits.


No matter what leads us to believe in money lies, knowing what they are — and the truth behind them — is the best way to hit “reset” on our mindset. When we do that, we can make better financial decisions.


Let’s look at some of the most common money lies we all buy into at some point — and the truth behind them.


#1 - I'LL BE HAPPIER WHEN I HAVE $_______.


"With $_____ (whatever amount you think is ideal), many of my problems would go away and I'd be happier."


Does this sound familiar?


Goals and target numbers for earnings, savings, and budgets are great. But if you make the mistake of thinking some magic number will flip a happiness switch for you, think again.


When we tell ourselves this money lie, we put too much emotion into a single number. And we may be setting ourselves up for disappointment - both if we never get $____, and if we do get $____ and realize it doesn't makes us as happy as we thought it should.


The good news? Studies show that making progress towards our goals can be incredibly satisfying, regardless of whether we hit the target.⁴


#2 - I DESERVE IT, REGARDLES OF WHETHER I CAN AFFORD IT.


"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.


#3 - I HAVE STRONG FINANCIAL WILLPOWER


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.⁵


And we're more likely to buy an impulse, and spend more, when we're stressed or we're looking for a new experience.⁶ That's probably why impulse spending shot up about 18% in 2020.⁵


Plus, the 374 million of us who are shopping with credit cards are probably spending more on the regular than we realize.⁷ The average credit card shopper spends about 10% more with their cards than they would with cash.⁸ And that's not even counting the cost of interest if the balance isn't paid in full.


#4 - I'LL SAVE MORE LATER


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.⁹


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.⁹


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.


Stay tuned for Money Lies Part 2 . . .


¹https://www.businessinsider.com/personal-finance/some-americans-think-theyre-better-off-financially-but-arent-2019-11

²https://www.apa.org/monitor/2017/05/alternative-facts

³https://www.psychologytoday.com/files/attachments/34772/money-beliefs-and-financial-behaviors-development-the-klontz-money-script-inventory-jft-2011.pdf

⁴https://www.psychologytoday.com/us/blog/dont-delay/200806/goal-progress-and-happiness

⁵https://www.prnewswire.com/news-releases/americans-increased-impulse-spending-by-18-percent-during-the-covid-19-pandemic-according-to-new-survey-commissioned-by-slickdeals-301055530.html

⁶https://www.newneuromarketing.com/what-psychology-knows-about-impulse-buying-in-2020

⁷https://www.creditcards.com/credit-card-news/ownership-statistics/

⁸https://www.valuepenguin.com/credit-cards/credit-card-spending-studies

⁹https://www.cnbc.com/2019/03/14/heres-how-many-americans-are-not-saving-any-money-for-emergencies-or-retirement-at-all.html

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