Money Lies We Tell Ourselves That Make Us Poor

Ok, level with me…when it comes to finances, have you ever told yourself a “little white lie” to justify spending or debt? If I were to ask you why you owe money to your credit cards, auto loans, or your friends, you would probably have an answer ready for me. It’s probably the same answer you tell yourself whenever you think about your debts. Whatever those answers might be, are you being totally honest? If you are lying to yourself, you are hurting your chances for financial success. Today we’re going to face some of those money lies and break out of the financial traps they create.

If you're not honest with yourself about your finances, your money lies will keep you poor. Here are 7 money lies we tell ourselves and how to face them.


I feel pretty certain that most of us go through a stage in our lives when we try to justify our spending habits that then spiral out of control into mounting debt. I know that I have done it myself and the way I justified my actions was to try to fool myself, lie to myself if you will. When I did that, I temporarily would feel a little better about the debt. But, deep down inside, I knew what I was really doing. It sometimes takes a serious wake-up call to make your behavior change for the good.

My Own Struggle With the Truth About My Spending

After my divorce back in 1997, I went through a period of depression which resulted in a lot of irrational spending that I later came to regret. Why did I do that? In my case it was spending money to make myself “feel better” about my life. Buying some luxuries like some expensive clothing or a new car was like the rush from some illegal drug and it definitely worked in the very short term. Buying those things and more was a way to say to others, “Hey, look at me. I’m doing just fine!”.

Twenty years have come and gone since that period in my life, but unfortunately that behavior exists all around and I see so many people who still try to deceive themselves about money and the reasons they are in debt. That’s why I have put together this list of some of the lame and desperate lies that we all tell ourselves about spending and debt.

Money Lies We Tell Ourselves

1. I deserve the things I want even if I can’t afford them

We often want something so badly that we will convince ourselves we deserve it even if we really can’t afford it. Credit cards enable us with that. The truth is we don’t really need these things but we want them. If we simply thought about how the purchase could affect our ability to pay for really necessary things, we would stop making most of these purchases. In a way, it’s rewarding ourselves now only to set ourselves up for punishment later.

The way to fix it is to set up some kind of account or kitty and save for those kinds of purchases. When you actually have that “extra” cash, the reward is legit and the dangers are avoided. You can also mandate a “waiting period” before making unnecessary purchases. You’ll find that if you have to wait a couple of days or even a week, your desire for that particular want may fade away.

2. I’ll never get out of debt so what does it matter if I spend what I don’t have

We live in a consumer-driven world and we are bombarded with advertising and images of excess every day. Many people feel totally powerless and succumb to these temptations. But spending and building debt you can’t pay for is like sitting in a big deep hole and thinking the way out is to dig deeper.

The real way out is to realize that it took a while to get into debt and that it will take a while to get out of it. Changing your spending habits and some time will do it. The peace of mind you’ll get will give you real power when you were powerless before that change. Not everyone is in debt and many who were aren’t any longer. They did it and so can you.

3. I don’t have to worry about how my debt affects my credit score because I am never going to buy a house

Here’s a shock to many people. Your credit score and rating isn’t just about whether you can qualify for a mortgage or a car loan. It’s a measure of you showing that you are a responsible person and it can be used in considering you for a job or when you get auto insurance for just two examples. Your credit score is based on things like on-time payment and the amount of the credit you use compared to the total amount you have available to you.

Even if you have a “good” score, having an excellent score means you are more highly rated and it gives you advantages. If you have a lousy score, it may mean financial hardships and that condition can follow you around for years and years. Your credit score (or lack of any credit) is in your own control and can even start with something simple like whether you have and pay back any student loans you took as a teenager. Credit isn’t something “nice to have”. It may be a safety net for you and it’s always good to have a safety net in life.

4. I can spend my money now because I will have my Social Security when I retire

The first problem with this lie is that Social Security was never meant to be the only source of your income when you retire. Even when you qualify for the maximum benefits and you wait until the last moments to file your claim (age 70), you will still find that you will be short on income unless you want to live at or below poverty level.

It is true that when you retire there are definite ways to save and cut back on your expenses like downsizing your home or giving up one of your cars. But there will be things that you won’t be able to control such as inflation (affecting the cost of just about everything) and healthcare which is bound to cost you more as you age.

And that’s making the assumption that Social Security benefits will always be there and benefits won’t ever be changed or reduced.

Saving money towards your future and retirement isn’t just a good idea, it is a necessity. Spending your money now and thinking you’ll be just fine with your Social Security income is a recipe for disaster.

5. I have unpaid debts and I can just ignore the notices and debt collectors calling me because they will eventually give up and go away

If your creditors have proof that you owe a debt, even if you won’t ever admit to it, then the simple answer is that they will never give up trying to get their money and may get a judgment against you in court. If you owe government agencies money, you can be certain that they will pursue you forever.

Any judgments against you will affect your credit rating and can lead you as far as declaring a bankruptcy, all of which can stay on your record for years and years and even for a lifetime.

The best way to handle the notices and calls is to make an attempt to repay legitimate debts you owe. Try a negotiated payment plan or settlement that can resolve the matter and leave you whole and in good standing. It may be necessary to seek legal help in some situations. If you don’t pay your debts, ignoring them will lead you to even worse consequences in your life.

6. I’ll be earning more money in the future so I can buy these things now

While being an optimist is generally regarded as a good thing, when it comes to your income, it is a risk to assume that every year will be better than the last one. First of all, there is the obvious. You could lose your job, even by no fault of your own. Companies go out of business or cut back on employees when the economy toughens and you never know when that may happen.

If you are paid based on commissions or some other incentive in your pay, it means your income can vary a lot from year to year. In addition, there are wage freezes, or family situations that may cause you to have to leave your job. Rationalizing that you will increase your income automatically is faulty judgment. If you live within your current income level, when you do earn more money it will seem like a bonus to you that you can spend or save at your discretion.

7. I will start saving for retirement tomorrow

Your retirement seems like it’s always a distant thing that isn’t something to worry about. Saving tomorrow is a big lie we tell ourselves and for many people, tomorrow never comes along. The longer you delay the start of saving for your retirement, the more danger involved.

By waiting, you waste and miss valuable years of accumulating and compounding your money that can literally cost you hundreds of thousands of dollars over the years. No matter how little you can start with, saving for retirement is the first thing you should be doing with your paycheck when you are working.

Lying to yourself may not seem like it can be harmful, but it is. Even little lies we want to hear, just like the ones Fleetwood Mac sang about, can put a big hole in your financial matters. There are times when you are thinking about lying, but you know deep inside that you are making a mistake that will come back to haunt you. If you can’t talk yourself down off the ledge, then talk to loved ones like a family member or friend or even just simply sleeping on any decision is a better way. Getting a little bit of space away from the temptations can prevent you from digging that hole of debt even deeper than you are in right now.

Are you lying to yourself about your spending habits? Have you ever been in serious debt or are you in debt right now? What do you do if you find yourself in a situation that threatens your financial health?


  1. Unfortunately, these lies are all too common. The one I have seen way too often over my 25-year professional career is #6. I fell into this trap for years, not saving money in my early years. I have often seen coworkers who are in debt but spend pay increases on new car loans, vacations, etc and tell themselves they will make up for it on their next pay increase, but never do and the cycle continues. Ouch!

    1. Dave, the first step in taking the corrective action is to make your plans and goals and just start. For every person that feels it’s hopeless, there’s probably a story of someone who has overcome it. Thinking positive is just a better way to deal with your financial setbacks. I appreciate your comments.

  2. I see 1 and 6 a lot, usually interrelated. I don’t know how many people I know who will tell me that they deserve some clearly discretionary treat. Sometimes it’s little and no big deal. Sometimes it’s hugely impactful, like a new car (with the associated payments). And they always justify it with “But I’ll have a new job/raise/better career soon.”

    Another one I see is that “It’s okay to spend this extra money (I don’t have) because it’s such a good deal. I’ve actually MADE money on this.” Except they are talking about stuff (not even stuff they need), and the new price and used value have little correlation. Unless you resell it and get a higher price for it, you haven’t made money by buying that great deal.

  3. Number 6 is the worst!! I catch myself falling into old habits of thinking that way from time to time and have to shake myself back to reality. Any boosts in income we get will be heading right to retirement, savings, and investments.

    Our credit card debt was a result of a house that wasn’t at all what we expected. That said, I definitely could have found ways to avoid the debt had I been thinking straight. An an INTJ, I’m totally comfortable saying it was my own dumb fault that we are in debt…but at least we’re getting out now!

  4. I have a friend who for years has told me at least 4 of these when we talk about her debt. The other one she says is “I don’t need my 401k money because I will probably work until the day I die,” which drives me nuts because I know she is making terrible decisions. Hopefully she will come around eventually.

    1. It is painful when your friends and relatives aren’t receptive to any suggestions that you might have to help them. Without becoming too pushy, you can keep trying to encourage them to recognize when they’re making a money mistake, but ultimately they have to come to the decision on their own. Sometimes, unfortunately, they have to hit bottom before they can start on their way back upwards. Thanks for your comments, Joley.

  5. Sylvia @Professional Girl on the Go

    When I started my first job, I definitely said number 4 to myself – a lot. I was so oblivious back then. Once I got serious I paid off $27k and now I save almost half my paycheck. I still use credit cards for my normal monthly bills (I like the reward points) and pay them off in full every month. Six years later, I understand my finances, where I want to go, and have a lot more options.

    1. It certainly sounds like you are on the right path, Sylvia. And saving about half your paycheck is a great accomplishment. Many people fail to recognize that being responsible with their credit and saving for their retirement is something they need to think about even when they’re young. I’m very glad you are on the right track and you should feel good about that.

  6. Oh man… I told myself lies #1-3 over and over and over again before we got it together financially. I don’t consider myself to be an entitled person, but I will admit that I fell into the trap of telling myself, “I deserve this even if I can’t afford it.” What a mistake. Luckily, we’ve turned this ship around and are heading in the right direction now.

    Excellent post, by the way.

    1. Thank you very much, Susanne, for your compliment. You are certainly not alone if you’ve told yourself some of these money lies. It’s very common. The key is to make the corrections and it sounds like you really have. That’s something that you should feel good about and it will come back to you as a huge benefit as the years go on. Thanks for sharing.

  7. It’s so crazy how we dissociate ourselves from our behaviors in order to preserve our feeling of being “right.” I’ve heard or thought all of these at one point, and think you’re spot on: self-awareness and accountability are key!

  8. I had an old roommate that believed in your points 6 and 7. He thought that he would be able to save for retirement later along with making more money in the future. Unfortunately twenty years later he’s still not saving and still spending. It’s honestly sad.

  9. Great tips Gary! Woke me up from a deep slumber. You are right, we must take our personal finances very seriously because once deterioration starts, if went unchecked, it will lead us into a never ending dept trap.

  10. Great post Gary.

    I just met with a young couple this morning – 24 & 26 – and they have bought into some of these lies.

    Unfortunately the lady’s parents have actually encouraged her to acquire debt. They’ve told her to expect to ALWAYS have a car payment. They ran up credit card bills and rolled them into the mortgage – and explained this to the daughter as good finances.


    I explained that her parents are fairly “normal” in today’s society. “Normal” is broke and stressed out though, and there is no reason to be normal. We discussed a plan to get them out from under the debt and build wealth toward financial freedom. I showed some numbers showing just how much progress they can make with small changes over the next 30 years. They’ll only be in their mid-50s and can be fairly set for life if they stick to a plan.

    1. Brad, you’ve pointed out exactly why young people need advice from someone who has knowledge and experience with financial matters. It’s a shame that just too often people make their decisions based on what they see other people around them doing and in the case you’ve mentioned, just accepting the parents advice when it might not be the right thing. Hopefully they’ll heed your advice and make the course corrections now. Thanks for your feedback.

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