Have you considered the possibility that you may have misunderstandings about certain financial matters that could potentially impact your financial security? The thing about these misconceptions is that they can often shape our beliefs without us even realizing that they’re doing so. This can be dangerous when the so-called “truths” we’ve built our financial foundations on aren’t accurate.
The money lies we tell ourselves impact the way we think, act, and understand money. And, since many of us are hesitant to talk about money with those around us, it’s not often that our conceptions are challenged. This could potentially lead to misunderstandings about money that may reinforce poor financial habits. Fortunately, it’s never too late to educate yourself and uncover the money lies that may be damaging your financial health, and we’ll discuss seven of these common misconceptions below.
Money Lie #1: I’ll be happier when I’m richer.
Setting a target amount of money that you want to save is smart planning. However, if your mindset is such that you believe that once you save X amount of dollars then you’ll be happy, you’re going to find yourself disappointed. When we tell ourselves lies like this, we’re putting way too much emotion into a single number and failing to appreciate the rest of the picture, not to mention setting ourselves up for heartbreak. What if you never save that amount? Or, what if you do save that amount but find you’re no happier than you were before?
Instead, find satisfaction in budgeting properly and sticking to your budget. Celebrate each small money victory, and learn to garner happiness from aspects of your life that are outside of money, too. Studies show that making progress towards our goals is incredibly satisfying, regardless of the target itself – so enjoy the journey.
Money Lie #2: I can avoid temptation.
Many people consider themselves strong-willed, but ask yourself – how good are you at avoiding consistent temptation, really? If you’re like most Americans, then you’re spending at least a couple hundred dollars each month on impulse purchases. Stress and emotions can play a role in this bad habit, but social media is a culprit, too. We’re constantly being bombarded with what’s trendy and new, and you may have a desire to keep up with the Joneses, but remind yourself that this kind of spending behavior is not in your own best interest.
If you find you’re frequently putting your budget at risk, try to put some fail safes in place to protect yourself from spending what you shouldn’t. You might adopt a mantra that reminds you of your long-term goals or leave your credit card at home and only take a limited amount of cash with you when you shop. Try a few tactics and see what works best for you.
Money Lie #3: I’ll work on my savings later.
If your savings are lacking, it’s a common concern that many people face. Too often we focus on what we need and want to buy now in the present instead of working toward our future goals. However, every time we put off focusing on our savings, we set ourselves up for failure down the road.
The earlier you start saving, the better off you’ll be. Conversely, of course, this means that the longer you put off saving, the harder it’s going to be to catch up when you finally do decide to focus on saving. Waiting too long to get serious about your savings means you face a higher risk of being ill-prepared when the time comes to retire. So, tell yourself that “later” is no longer an option, and try to commit yourself to saving a certain percentage of your income from each paycheck. It doesn’t have to be a significant amount either; the act of taking small savings steps in the present will help you adopt positive money habits and build a better future.
Money Lie #4: Debt can be good or bad.
Different types of debt, such as mortgages, student loans, and credit cards, can have varying impacts on an individual’s financial situation. While there are certainly key differences between certain kinds of debt, be cautious about thinking of any of your debts in a good versus bad binary. All debt comes with a cost, and every loan we take out has an impact on our current and future financial situation.
When you’re considering taking out a loan, rather than focusing on whether it’s going to be good or bad debt, focus instead on the interest. How much will you be paying in interest over the lifespan of the loan? Will this really help you achieve your financial goals or is this ultimately going to set you back?
Money Lie #5: I deserve this because I work hard.
It can be incredibly tempting to want to treat yourself after a particularly bad week at work or when you receive some devastating news. And while it’s completely in your right to pamper yourself, be sure that you’re not breaking your budget when you do. This doesn’t mean never treating yourself, but it does mean setting aside a certain amount for your temptations and not surpassing it.
Instead, try to find budget-friendly ways to make yourself feel rewarded. It could be a night in with your closest friends, or maybe a bubble bath with some of your favorite candles lit. There are plenty of ways to treat yourself without breaking the bank.
Money Lie #6: It’s bad to want more.
It’s safe to say that greed doesn’t serve you or your loved ones well. However, there’s nothing wrong with wanting better for yourself and your family. Believing that it’s bad to want more can lead to you holding yourself back and impede the work you are doing to improve your financial situation. It’s okay to nurture your aspirations and fight for your goals, so long as you’re framing wanting more in a positive manner.
Getting honest with your money.
Did any of these lies sound familiar to you? Most likely, we’ve all fallen victim to one or two of them throughout our lives, and you may even notice yourself trying to rationalize a decision that you know isn’t the best choice. The truth of the matter is, when it comes to finances, honesty is the best policy. Being honest with yourself about where you are, what you want, and what you need to do to get there is crucial if you want to find long-term financial success.
