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Episode 13: The Lies We Tell Ourselves About Money

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

Most of us lie to ourselves. Psychologists put it down to something called cognitive dissonance, the uncomfortable tension we feel when our behavior does not match our beliefs. We may think we know the facts about our finances. But our beliefs can often overshadow the facts.

We know that we should save for the future, protect our credit scores, and build wealth, so when we don’t do it, we come up with lies to make ourselves feel better.


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.1

The money lies we tell ourselves can change the way we think and act when it comes to finances.2

And since most of us rarely talk about money with our friends and family, the money lies we tell ourselves stick around. That can lock us into destructive beliefs and reinforce poor financial habits.

But no matter what money lies we tell ourselves, it’s never too late to set the record straight.

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

What Money Lies are You Buying into?


“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 make us as happy as we thought it should.

The good news? Studies show that making progress toward our goals can be incredibly satisfying, regardless of whether we hit the target.3

Money makes life easier, but it doesn’t make you happier.


“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.

I also want to comment about Opportunity cost…the hidden cost of every decision you make. This isn’t necessarily a lie people tell themselves because many people don’t event consider it or understand how it impacts their money and their life. Opportunity cost is the potential gain you miss out on when you choose to spend money vs. saving or investing that same money. Or said another way, with each option you choose, you’re saying “no” to a different option. The value of what you do not select is called your opportunity cost.

You can think of it as the value of what could have been.

So if you buy a sports car, let’s say, the cost of the car is more than the payment you are making on it. You must also add in the opportunity cost to arrive at your true cost. Or let’s say you were torn between making a car down payment of $10,000 or investing that same $10,000 into an index fund.

Well, that down payment on a car would leave you down $10,000 (but up one car!) Meanwhile, if you were to invest that $10,000 into an index fund with an annualized growth rate of 9.8%, it would become a whopping $25,470 in years.

If you buy the car, your opportunity cost is all the money you could’ve made investing—nearly $15,000! That’s over twice your initial investment in spendable or investable passive income. If you decide to invest, your opportunity cost is a set of wheels.

Which would you choose?


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. Perhaps your bills are due, there are things you want to buy, or the people you love need cash. We tell ourselves we’ll start saving next year, believing we’ll have more money to spare.

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

The problem is, the future will bring the same financial responsibilities and temptations, if not more. And saving money — even if it’s just a little at a time — offers us a financial cushion against the unexpected.


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 fix: Start slow. Even if it’s only 2% of your income, put it in a savings account and pretend it’s not there. Let’s say you bring home $4,000 per month. After taxes, you have just enough to cover your monthly obligations. Still, you are determined to save 2%, which comes to $80 each month. You cancel a couple of subscriptions and minimize your cell phone bill. By the end of the first year, you have $960. It may not feel like much, but it’s enough to make small car repairs or replace a broken window in your house.


Once you grow accustomed to living without that 2%, you can gradually raise the amount you save. It does grow more comfortable with time.


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. And then one day, you wake up and you’re 50!

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. Losing out on the effects of compound interest is a huge financial mistake.

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.”


Truth: Retirement will be here before you know it, no matter how young you are. Compound interest — earning interest on your interest — means that the earlier you start, the more your money will be worth.

The fix: Learn the power of compound interest and apply it to your life. Let’s assume that you invest $300 per month, earn an average of 7% on the investment, and plan to retire at age 67. Here’s how that works, depending on when you start saving:

  • If you begin at age 21, that $300 a month investment will be worth $1,104,306 at retirement.
  • Wait until you’re 35, and the same $300 per month will be worth $396,785.
  • If you begin at 49, your investment will be worth $122,397 when you retire.

If the ins and outs of investing confuse you, make it easy by contributing to a company-sponsored 401(k) or another retirement investment vehicle. If your company matches any portion of your investment, make sure you earn the full match. If you don’t, you’re throwing money away.


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 its 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.

Honesty with yourself goes a long way with finances.


Your credit score does matter when you make a significant purchase or borrow money. But it also counts when you want a new place to live or apply for a new job. It even matters when you purchase a new cell phone or get utilities turned on.


How to fix your score?

  • Pay all your bills on time. Payment history is the biggest factor in calculating your score.
  • Keep your credit utilization rate as low as possible. Credit utilization is the amount of credit you’re using divided by the amount of credit you have available. For example, if you have $10,000 of available credit, but only carry a balance of $2,500, your credit utilization rate is 25%. It’s a good idea to keep your rate below 30%.
  • Order a free copy of your credit report at least once a year. Sites like AnnualCreditReport.com provide reports from all three consumer credit reporting companies. Check each report carefully. If you find a mistake (like an account that does not belong to you), you should dispute it.



It doesn’t matter how much money you make. What matters is how you spend it.


What you can do? Commit to saving and investing. The only way to build wealth — no matter how much (or little) money you earn — is to pay yourself first.

Let’s say you take a job at age 22, earn $40,000 per year, and never get a raise. Your take-home pay is approximately $2,600 per month. You’re determined to build wealth on your income, so you invest $600 each month and live frugally on the other $2,000.


If you make this commitment at age 22, and your investments pay an average return of 7%, you’d have put away $295,168 in 20 years. By the time you retire at age 67, you could have over $2 million.


Obviously, it’s a very simplified example — you are unlikely to stay at the same wage for your whole working life, and you’d also need to put money into an emergency fund and cover other expenses. But if you invest in the stock market for the long term, 7% is a realistic return. And it is possible — though not easy — to get by on $2,000 per month.

We often lie to ourselves because it often makes life easier in the short term. The first step on the path to healthy finances is to get honest about what matters. The second is to take ownership of what happens next.


On the flip side there’s money lies we tell ourselves and negative self-talk that sabotage our good habits and decisions we’re trying to make. It’s like we try to doom ourselves even before we begin. Just when we are focused on wealth, there’s a little person inside of us that says, money is evil…why are you so obsessed with wealth. Or, you don’t deserve the money you are saving and investing. Or, money will not make you happy.

So let me leave you with this Financial Lesson:

How many of these money lies sound like something you’ve told yourself?

At some point, I think we’ve all tricked ourselves with at least one of them.

Maybe we were rationalizing a decision, or we were trying to make ourselves feel better about what we wanted to do with our money. And we probably didn’t make the best financial choices as a result.

Here’s the truth.

Honesty goes a long way with finances.

What we tell ourselves, and what we believe, about money influences our financial behaviors. If we’re not telling ourselves the truth, our money lies won’t just drain our wallets. They can affect our financial awareness and inflate our confidence. And they get in the way of maintaining or growing wealth.11

When we recognize the money lies that we believe, we can reset our thinking, change our mindset, and start taking action. And that sets us up to make better choices and make more progress toward our big financial goals. Here’s to Getting Her Done.


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

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

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

4 – https://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

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

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

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

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

9 – https://solvingprocrastination.com/why-people-procrastinate/

10 – https://www.statista.com/statistics/944961/personal-debt-duration-usa/

11 – https://www.pnas.org/content/108/Supplement_3/15655



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