Updated on 09.26.14

Lying to Yourself About Money

Trent Hamm

(and Anything Else)

not sure why I chose this picture but it strikes some chord with me in connection to this postFirst, a confession. I often lie to myself about my weight. I’m not obese, just a bit heavier than I’d like to be and heavier than I was in college. I eat somewhat healthy – and drink plenty of water – but I tend to not exercise as much as I’d like to. Often, when I see a positive fluctuation in my weight, I tend to blow it out of proportion and congratulate myself on doing well, but when it slides back, I try to ignore it and keep thinking happy thoughts about my weight and health.

When I think back, I used to lie to myself about my money as well. I’d see a surplus in my bank account and think that things were going fine, even though debts were mounting and I kept buying stuff I didn’t need. I kept this behavior up until I suffered a severe financial mess, which finally woke me up that I needed to make some serious changes to my financial behavior.

Yet, even now, I still find it very easy to create a rosy picture of the situation in my head. I look at my account balances, think “Wow, I’m in really good financial shape,” and then daydream about expensive items that I really don’t need.

It’s a constant battle to escape the urge to lie to yourself. It’s something I constantly fight, and I tend to believe that a lot of other people fight the same urges. It’s so easy to believe things are better than they truly are, and then it’s similarly easy to use that rosy view of reality as an excuse to do things that really don’t benefit us in the long run.

I’ve found only a few tactics that really help in this battle, and thus I use them quite often.

Tactics to Avoid Lying to Yourself

1. Numbers Don’t Lie

With both personal finance and body weight, the numbers don’t lie. I can step on a scale and see exactly how much I weigh, just as I can fire up my spreadsheet and run my net worth calculation. When I look at those numbers, and compare them to where I was at before, I can see very quickly whether I’m really making progress or I’m backsliding.

I can tell myself until I’m blue in the face that I’m making good choices, but if I’m not really walking the walk, the numbers will show me the truth. When I spend money foolishly, my net worth goes down. When I eat something I shouldn’t or talk myself out of exercising, my weight goes up (or at least holds steady).

2. Check the Numbers Often

The first obvious excuse to get away from the truth of the numbers is to simply not look at the numbers. This is a very easy tactic – simply don’t look. Charge up that credit card! You don’t have to see the balance for a while, but you get to enjoy the goodies now!

Because of this tendency, I find it useful to make a weekly routine of checking the numbers. Not only do I calculate my net worth on a weekly basis, I also step on the scale at roughly the same time and check my weight. This keeps me honest. It’s pretty hard to look at a raw number that indicates bad results and still try to peer through those rose-colored glasses.

3. Look At The Change, Not At The Total

If I spent my time just looking at my total assets and ignoring the fact that I’m trying to effect some real financial change in my life, it would be easy to convince myself to go buy stuff. “I have lots of money,” I would say, “and that means I can easily afford a new peach de-fuzzer!”

Because of that tendency, I always figure the percentage change instead of looking at numbers. My net worth going up 1.3% is a good sign, but it doesn’t say “go out and buy!” like saying my net worth went up $2,100. Similarly with my weight, seeing that I lost 0.7% this week doesn’t say “time for some ice cream!” like losing six pounds might.

4. Don’t Make Excuses For Bad Numbers

When you step on the scale and see a number you don’t like, it’s often easy to come up with reasons why it doesn’t matter. “Oh, it was Thanksgiving…” you say, and then you’ve just justified the loss of a lot of hard-won progress. The same is true for money – you see a 2% drop in your net worth and you justify it with a “Oh, it was a special occasion…” and it’s just fine.

It’s not just fine. The numbers are telling you very clearly that something isn’t fine, and choosing to ignore the numbers when they’re bad means that you’re not really committed to any sort of change after all.

Poor numbers are the most challenging part of taking off the rose-colored glasses. We don’t want to really believe we can fail, even on a small scale, so when we do, it’s often hard to deal with. Coming up with excuses, though, is merely a way of saying that you don’t really want to bring about change in your life. If the numbers are bad, that means it’s time to step up to the plate, not time to make an excuse and eat another filet mignon.

The only way to stop lying to yourself is to face the truth, and raw data is as close to the truth as you can get. If you’ve made good moves, the numbers will show you that – and if you’ve made bad ones, the numbers will reveal that, too.

Loading Disqus Comments ...
Loading Facebook Comments ...
  1. Mark says:

    This “justification” or “rationalization” that you mention is EXACTLY what puts most people into a bad financial situation. You say that “Spend less than you earn” is the most basic financial advice, but “Don’t lie to yourself about money” could be the most basic way to get there.

    “I can charge this, my balance is already $10,000, so what’s another $50?”

    “I already spent $1000 on my new TV, the $400 sound system is a must.”


  2. Mark says:

    The only thing that amazes me, Trent, is that such a smart person as yourself ended up in such a bad financial position in the first place. Your thoughts on this blog are great and intuitive. My thought is that if someone like you can get into a bad financial position, then anyone can. Keep up the great posts.

  3. Trent, you hit the nail square on the head. The best way to lie to yourself is to not look at the numbers. I did just that for at least six months or more last year…then my husband was sent to Korea for a year and I no longer had a choice but to look at the numbers once in a while, all the while feeling helpless each time I did. It took a crazy guy on the radio (Dave Ramsey) to snap me out of it and get me on track. Now I look at the numbers almost every day :)

  4. Laura says:

    Although this is a theme running through many of your posts, I don’t think it ever gets old, so thank you for reminding us again to be accountable for our spending! I’ve recently started calculating my net worth monthly and it’s been an eye-opener. Since I’m in college with no income, my net worth goes down steadily during the school year. What’s surprising is by how much! It’s great motivation pass up dinners out and drinks at the bar and focus on good times with friends that don’t cost a thing. Hopefully my current frugality will mean more money to start my life with after graduation!

  5. Tina Su says:

    I love your blog. What a great idea! Keep up the awesome work.

    Love & Gratitude,
    Think Simple. Be Decisive.
    ~ Productivity, Motivation & Happiness

  6. jmacdaddio says:

    I wasn’t seeing the whole truth of my financial picture. I’ve avoided the trap of credit cards, and I’ve kept my consumer debt to a minimum, but I could have done a better job of saving (non-retirement that is: I’ve got a decent pile in 401k and IRA savings). I kept looking for the big score (better job, new career) instead of trying for slow and steady wealth accumulation. My focus was on collecting my financial info rather than on analyzing it and making changes. Luckily I figured this out and instead of projecting my cash flow out into the future, I’ve found ways using Quicken and spreadsheets to figure out how each month’s spending went down and whether I’m making progress or going in reverse. Future cash flow predictions have their place for the next 4-6 weeks but beyond that it’s hard to say what unexpected expenses will come up.

  7. Frank says:

    I agree. I am finding that checking my weight regularly is just as important to my health as making a budget or balancing a checkbook is for my money.

    Another danger- letting someone else lie to you! People may be trying to be nice and say you look like you are losing weight. If you aren’t, it’s easy to fall for it when you hear it from someone else (I know I have).

  8. jm says:

    Bad example. Unless you are very skinny or very fat, how much you weigh is not a good indicator of how healthy you are.

    And even more, how much your weight changes on a weekly basis is not a good indicator of anything at all, because its completely natural for the human body to vary by a few pounds from week to week or even day to day.

  9. sk says:

    Weight is not a good number to fixate on. A better approach is how well the same clothes fit. I have been wearing the same pants for about 5 yrs now and some days they are tighter and other days they are loose but they fit most of the time. The only reason I have to retire them is because the age means they are fading and look terrible.
    Also with food everything in moderation is an excellent motto. It may be diet cola but 8 cans a day is not good. The same goes for any food, even excess water leads to water poisoning!!

  10. Grace says:

    Thoughtful post.

    But Numbers do Lie, and Net Worth numbers lie most of all, especially if much of your net worth consists of the home you are buying.

    A better example is a three-month budget; With rare exceptions (annual house insurance maybe?)all expenses will show up sometime during that three-month budget. It will show you where you really are, as opposed to where you’d like to think your are.

  11. I’m a numbers addict.

    Even if I wanted to forget I couldn’t. I check my Yodlee account too regularly to not know my exact financial situation at any given moment!

  12. s says:

    I second jm’s comment about the weight “numbers”.

    But he left out something that I find important: what the weight is made up of.

    If you eat very little and/or skip out on exervice, you may lose 10 pounds, but half of that might be muscle. You are losing good weight.

    Conversely, if you do any sort of muscle building activity (which anyone who wants to be “healthy and in shape” should be doing), you are likely to gain good weight. In someone that doesn’t have a lot of fat that they are dropping, they could actually see a weight gain after eating right and working out. But it’s not “bad”.

    So, maybe a better “number” to use for this would be percentage body fat, or even just measurements at waist/arm/thigh/etc. These numbers are more stable, and are a better indicator of overall health than just your weight.

  13. mk says:

    This is a great post, and great points to remember.

    For the last half year, I have a spreadsheet where I enter my account balances at the end of each month. Everything from the checking account to the stock portfolio and retirement funds. With one exception (when I ended up having to take the dog to the vet which along with the prescribed medication took a pretty good bite out of my finances) so far by net worth has increased every month. I don’t really have a budget, but do set aside a fair chunk of money right away when I get my pay each month, which really helps: it puts if nothing else a psychological barrier between me and my savings, and I know that the better part of the money that is left in the account once those transfers have been made is money that I can use with a reasonably clean conscience. Of course, anything that still is left in the account at the end of the month goes into the savings account, too.

  14. K.J. says:

    Hey Trent, what’s this painting?

    I’m really enjoying your blog — it’s been serving as a cheerleading tool for me while I keep myself on the fiscal straight and narrow, and this is another great post. :-)

  15. Johanna says:

    If a significant portion of your money is invested in the stock market, then your net worth can fluctuate from day to day, just like your weight can. So I think the idea of daily fluctuations actually strengthens the analogy, rather than weakening it. With both your weight and your net worth, the little things that you do can have a big impact on the result, but not every change in the result is caused by something you did. And you need to keep that in mind when tracking your progress, and not freak out every time the market takes a little tumble or your body just decides to retain water for whatever reason.

  16. Sharon says:

    Interesting. I didn’t run my net worth for a month or two because I felt so bad about my financial issues. I wasn’t able to do the things I was hoping to, but when I ran the numbers, I realized that it was still better than I thought. I wasn’t moving as fast as I wanted but I was still going in the right direction. Now that I know the numbers, I am more relaxed…

  17. lorax says:

    A peach de-fuzzer. I love it!

    Lying to yourself is an important part of psychology… keep up the good blogging Trent.

  18. Mike says:

    I think that sites like Yodlee are the key to not lying to yourself. I use Bank of America’s version called Portfolio (it looks like it is the exact same application as Yodlee), and I would highly recommend either.

    You can add all of your accounts, including manual ones that don’t have websites. People will always have good and bad months, but you can’t argue with a 12 month history graph of your net worth. You can even choose which accounts to include in your net worth calculation. I exclude my mortgages and house since I don’t view that as liquid.

  19. Kathryn says:

    It’s particularly important not to lie to yourself by looking just at how I’m doing “today.” Right now, we several thousand dollars in the savings account, and if I looked just at that, I’d think I was all set and could relax and indulge myself a little. But actually, we also have a several thousand dollar payment due in January, so that money isn’t really available.

    My trick for keeping an eye on how I’m really doing is to use Quicken and fill it out at least a month ahead…entering all the expected bills due and expected paychecks. That way, even if the checking account has a fat balance, I’ll know that three weeks from now, there will only be $84. A written, solid reminder that to help me limit my spending to what I have.

  20. Sylvia says:

    You are young and it is easy to take your health for granted. However, what we eat really determines a great deal our future health. To eat alot of rich foods, meats etc is really a death sentence in later years. We can’t lie to ourselves anymore. I’m 55 and my husband is almost 61—I know now that eating wrong will most certainly kill us. So start really taking it seriously now, while you are young. Of corse the same goes for money. Frankly, I’m afraid to spend my money foolishly because jobs are not easy to find when you are middle aged. Keep working on your goals for financial peace and physicl health. You won’t regret the effort!

Leave a Reply

Your email address will not be published. Required fields are marked *