When you’re dishonest with yourself or others about your financial situation, the main person that suffers is you. With that in mind, let’s take a look at some of the most common lies people believe about money without even realizing the real damage it can do.
1. Your credit must be good if you’re receiving new credit card offers.
This one can put you in a lot of danger, especially if you’re already deep in debt. It may seem tempting to apply for a new credit card with a shiny low interest rate that arrives in your mailbox. You wouldn’t have been invited to apply if the company didn’t think you were financially responsible, right? Wrong. Surprisingly, even people with poor credit can be approved for new cards. Besides that, why would you want to accumulate even more debt if you’re already in the red?
2. You saved money a purchase you didn’t plan on making.
Retailers may tell you you’ve saved significant money by buying an item on sale, but if it was something you weren’t planning to purchase in the first place—especially if it’s something you don’t need—then you’re actually losing money. Coupons and sales are two main ways retailers encourage their customers to spend more, not save more. Don’t give into the temptation to buy something simply because it’s on sale, unless it’s something you really need.
3. You make a purchase because you feel entitled to it.
It’s definitely a good thing to reward yourself with a treat every now and then, but when these “treats” become frequent habits, they can put you in financial trouble. This includes everything from pricey dinners, to exotic vacations or shopping sprees at your favorite retail store. Instead of always rewarding yourself with something monetary, why not get creative and spend more quality time with loved ones, or indulge in a favorite activity?
4. You make a big-ticket purchase with the assumption you’ll be earning more in the near future.
This is a financially dangerous mentality that can sink you into a deep hole of debt. Perhaps you’re thinking about purchasing a more expensive home or car than you can afford with the assumption it will work out when you soon start earning a higher income. But what happens if you never get that anticipated raise…or worse, if you get laid off from your job altogether? You may unfortunately find yourself swimming in debt and wondering how you’ll cover all your bills. In reality, there are no guarantees when it comes to our future income, so it’s important to be conservative when making purchases that could affect your future.
5. Tell yourself you’ll start saving for retirement later.
Putting things off until tomorrow is never a great idea. It becomes easier to continue delaying action day after day, until you’ve accomplished little down the road. This is especially true with saving for retirement. It may seem like a long way off, but trust me, your golden years will creep up on your before you know it. Plus, the younger you start putting money toward your retirement fund, the more time that money has to compound and grow. Make a commitment today to put a certain percentage of your paychecks toward a retirement fund each month, and have that amount automatically transferred from your account. Chances are, you won’t miss it now, but you’ll be grateful for the amount you saved when you need it later on.
The Bottom Line: By ditching the above lies you may have been telling yourself about finance, you’ll be well on your way to a more profitable future. Above all, work to ensure your spending is less than your current income, and save as early as you can!