Updated on 03.07.16

‘Phantom Savings’ and Other White Lies We Tell Ourselves

Stop lying to yourself about how much you save - it's costing you money.

When my husband and I decided to remodel our entryway, living room, and family room earlier this year, we found ourselves falling into some ugly, old habits. It all started when we hired a contractor to knock out a few walls and put in a metal support beam. As with any other home remodeling project, we ran into some snafus.

Because of the way our new room was going to be configured, our old refrigerator wasn’t going to work in the new space. It wasn’t going to be in our living or family room necessarily, but right next to it — in a spot where they were putting up a new half wall, which would make the old (gigantic) fridge appear drastically oversized.

We brainstormed ways to fix the problem that didn’t involve buying a new refrigerator, but came up with almost nothing. So there we were, preparing to go over budget and not all that happy about it.

Then, a week after he got started, our contractor came up with a creative way to move the new wall so that our existing refrigerator would work after all. Problem solved, right?

I immediately thought this was the best news I had heard in a while. After mentally preparing myself to spend anywhere from $500 to $1,200 for a new or used refrigerator, it was a huge relief to see that burden disappear.

Then something crazy happened between myself and my husband, and I am so glad I caught it before it got out of hand.

How We Lie to Ourselves about How Much We Save

Have you ever avoided a large expense somehow, and then convinced yourself that you actually saved that money yourself?

That’s how my husband and I started to feel right after we found out we didn’t need a new fridge. “What about the $1,000 we saved on the fridge?” I asked my husband. “Should we bank it, or should we spend it on some other aspect of our project?”

“We could see about getting a new front door,” my husband said.

And we were off to Lowe’s to look at front doors shortly after that. But, I think we got lucky there. New front doors at Lowe’s were so expensive that I quickly fell back in love with our existing, old, creaky front door. And instead of replacing it, a new coat of paint on the exterior sounded like a much better idea.

Plus, a serious reality check was headed our way. Later that week, we sat down and went back over our original remodeling budget. After going over the numbers and seeing if we were still on track, we quickly realized something we should have known and remembered all along.

Since a refrigerator wasn’t a planned expense, it wasn’t even on our original budget. Thus, the money we had “saved” was really all in our heads. In reality, we hadn’t saved anything; we had just avoided going over budget. That is not the same thing, and I am so glad we snapped back into reality before we made a $1,000 mistake.

woman shushing

Photo: LaVladina

Five White Lies We Tell Ourselves

In my experience, this kind of thinking costs people money all the time. Through all types of mental gymnastics, we convince ourselves that we are saving money when we really aren’t.

I’ve done it; you’ve done it; we’ve all done it. Sadly, telling ourselves white lies about our spending and saving habits leaves almost no one better off.

In addition to the type of “phantom savings” my husband and I convinced ourselves we were getting, there are plenty of other ways we lie to ourselves about money. Here are a few of the most obvious:

‘I bought it on sale, so I saved a lot of money.’

I’ve seen this white lie play out time and time again. You’re at a store with a huge sale going on and you pick up something you like because it’s 50% off.

That’s awesome, and definitely a huge savings — if you needed the item anyway.

But if you bought something you don’t really need, you didn’t actually save anything – you spent money you wouldn’t have spent otherwise. You simply spent less of it than you would have if you had paid full price. That’s certainly okay, but it’s not the same thing as “saving money.”

‘I got the cheaper version to save money.’

This is a corollary to Lie No.1. Let’s say you’ve been itching for a new set of Callaway golf clubs, but you settle for a less expensive set instead. The real question shouldn’t be whether you saved money by buying the less expensive set. The real question is: Did you really need new golf clubs in the first place? 

The same can be said about any other unplanned purchase, whether it’s a new purse, fancy heels, or a new sofa for your living room. Whether you buy the high-end item or a less expensive version of it, you’re not really saving money if it’s not something you were planning to buy; you’re spending.

‘Scoring a 0% APR is saving me money.’

This is one I used all the time to justify purchases in my 20s — including the time I bought my first new car. I got 0% APR for five years, which made me feel like I was getting a really awesome deal. Sadly, getting 0% APR only meant that I spent way more money than I should have.

While it’s true that getting a good deal on financing can help you save money, it isn’t the slam dunk it’s made out to be if you spend more than you planned. If you use 0% APR as an excuse to buy something you don’t really need (like I did), that 0% APR can cost you dearly.

‘I’ll pay it off next month.’

Here’s the biggest lie of them all, and it’s one that can have disastrous consequences down the line. When you don’t have the money to buy something you want and charge it, you tell yourself that all will be well when you pay off your balance next month or next payday.

This lie can easily have a snowball effect. If you can’t afford the item now, one more month usually isn’t going to change that. And what happens when you can’t pay off the purchase next month – or even the month after that? High-interest credit card debt happens, that’s what.

‘I’m spending all this money anyway, so what’s the difference?’

Here’s one that is easy to get caught up in no matter how frugal you are. When you’re spending more money than you normally would — on vacation or during a home improvement project, for example — it’s tempting to add one more expense to the pile… and another.

You’ve mentally prepared yourself to use a big chunk of your savings, so it’s easy to become desensitized to spending money and let it get out of hand. After all, you’re already spending x amount of dollars –so why not round it up?

Obviously, this is a very slippery slope that could lead you to spend far more than you planned. But it can happen easily if you’re not paying attention, which is why it pays to keep yourself in check and stick to your budget.

The Bottom Line

When it comes to how we save and spend our money, old habits can die hard — so be on the lookout in case your old, free-spending self makes an appearance during your next remodel or at the clearance rack.

Let’s face it: Spending more money than you planned is a piece of cake, and it’s easy to justify purchases if you can convince yourself that you “saved money” along the way.

But we need to be honest with ourselves when it comes to how we spend and how we save. There’s nothing wrong with planning out purchases and spending the money we worked so hard to earn, but we should never twist the truth to get what we want.

They say white lies never hurt anyone, but they can cost you a whole lot of money.

Have you ever convinced yourself you saved money when you really didn’t? What ways have you lied to yourself about your own savings?

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