As twenty-somethings, we often justify our money behaviour with white lies to make ourselves feel better. Even though we have bills to pay, future goals to save for and, in some cases, huge education debts to pay off, we let our wants overshadow our financial needs. Last year, Caroline Cakebread, one of GetSmarterAboutMoney’s Masters of Money bloggers, wrote a post identifying the “Top 5 money lies we tell ourselves.” Inspired by her post, I’ve compiled a list of the top six money lies I hear from my fellow twenty-somethings:
1) By not going, I’m being cheap and missing out on a good time. There’s nothing worse than having to bail on plans because you “can’t afford it” and then feeling left out. I’m a huge advocate of prioritizing friendships, but spending quality time with others shouldn’t mean depleting your bank account. Instead of dinner and drinks, suggest a night in (potlucks are a great alternative). If your friends still insist on going out, consider having a small meal before and ordering an appetizer instead. Or, if you really can’t afford it, don’t go. It’s not the end of the world, especially if it’s something small, such as dinner and drinks. You’ll get over it, and your bank account will thank you.
2) I deserve it. Newsflash: just because you fulfilled your daily duties or had a rough morning doesn’t mean you deserve a prize. I know it’s easy to lose sight of your financial priorities – especially when you’re young and have a ‘lifetime’ to make savings. This kind of mentality will not only hurt your financial future, but will also impact your monthly cash flow. I can’t tell you how many people I’ve heard complain that they’re broke or can’t afford something, yet frequently eat out and splurge on shopping, expensive gadgets and memberships. Small purchases and occasional indulgences add up big time. Track your purchases for a week, including even small items like coffee and gum, and then group them into different categories (e.g. groceries, dining out, utilities, transportation, etc.). The results will shock you. The good thing is you should be able to clearly see where you can trim your purchases.
3) It’s a good deal and on sale, I’m practically saving money. My Dad calls this “spending money to save money,” and is a little white lie — according to him — that I tell often. It doesn’t matter what it is; groceries, electronics, clothes, you name it, if I see something I like on sale, even if I don’t need it, I’ll contemplate buying it. A game of tug of war with myself, I’ll go back and forth questioning my decision. The “high school me” was a huge impulse shopper and fell for this lie constantly. Today I have measures in place to make sure I don’t blow my budget. I only purchase something if it meets the following criteria: a) it’s something I’ll use frequently, b) I’ll still be thinking about it later, and c) isn’t ridiculously priced for its value.
4) I don’t make enough money to save. No matter your financial situation, we can all afford to save. Just because you don’t have a full-time job or have student debt, doesn’t mean you can’t set up an automatic savings plan with your bank. Evaluate your budget and decide what you can reasonably afford to put aside. Whether it’s $10, $50, $100, or $1000+ a month, every penny counts. Want to save money even faster? Look for areas in your daily life where you can cut costs. Big ones include cable, cell phone bills, grocery shopping (meal planning is key!), your commute (can you walk instead of taking public transit or take public transit instead of driving?) or brown bagging your lunch instead of buying. Although these seem like small expenses, over time they add up and can make a huge impact on your net worth.
5) I don’t have the time to figure out my finances. Often the people that use this lie are the ones needing a financial makeover the most. Even my busiest friends seem to have time to post all over Facebook, go to the gym, and dine with friends. Everyone has the time; they just choose not to do it. Get your priorities in order, and dedicate an hour to tracking your spending (use a notepad or write it in your phone), completing a financial goals worksheet and creating a budget (try out this free budget worksheet template).
6) Price doesn’t matter when it’s an investment. Before you make any big purchase, force yourself to realistically calculate how much you’ll use it, and how it’ll affect your cash flow. Sometimes a purchase may seem like an “investment,” but in reality it isn’t something that will benefit you long-term, nor is worth sacrificing your goals.
What are some money lies you’ve heard or say to yourself to justify your spending behaviour? Let us know in the comments!