Updated on 12.15.08

Money and Honesty

Trent Hamm

Honesty by thinkpublic on Flickr!One of my favorite people in the world to talk to is my pastor. Our conversations are wide-ranging: we might talk about Dietrich Bonhoeffer‘s writings one day and the ins and outs of starting a charity the next. Indirectly, she’s provided fodder for several posts here at The Simple Dollar.

A few days ago, we were talking about some of the history of the church when she used the offhand phrase “honest to a fault” in reference to a person that we both knew. My impression of this person was similar – he’s just one of those people that comes at everything with 100% honesty, unafraid to admit his own faults but also unafraid to say exactly what he thinks.

But is that a fault? We live in a culture where little white lies are often rewarded. We’re taught from a very early age that small dishonesties are an acceptable and normal part of life. I remember, for example, when I had a long conversation with my mother about the “truth” about Santa Claus, and then a few years later, I felt really guilty about perpetuating that myth. (As an adult, I’ve actually come back to a metaphysical sentiment that Santa Claus is in many ways real, but that’s an impossible thing to describe to a six year old.)

I’d go so far to argue that dishonesty is at the root of almost every significant personal finance problem people have. Let’s walk through some of them.

Not planning ahead for the future If you tell yourself that you’ll always be young, your health will always hold out, and things will take care of themselves, you’re lying to yourself. Everyone ages. Everyone has misfortunes in life. Choosing not to plan for them to at least a degree is lying to yourself, nothing more, nothing less.

Arguing with your spouse about money Almost every spousal disagreement about money results from some level of dishonesty from one person or another. Either one partner is directly lying by hiding information or mis-stating facts or is indirectly lying by hiding expectations and hopes from their partner.

Spending money to feel better about yourself If you spend money on a regular basis in an attempt to make yourself feel happy – or even merely feel adequate – you’re lying to yourself by telling yourself that these material purchases will make you feel better. True happiness comes from within – external signals merely confuse you and mislead you.

Making poor investment choices Even poor investment decisions are a form of dishonesty. If you don’t adequately research your investment choices and invest the time to come up with a plan, you’re investing blindly and convincing yourself that blind investing decisions are good ones. The only way to invest honestly is to do the footwork – know what you’re buying and why, not just following everyone else.

When you fall into each of these traps – and many others – you’re falling into the trap of dishonesty. You’re convincing yourself – or attempting to convince others – of something that’s untrue (or, at the least, unfounded). Every time you fall into that trap, you end up hurting your own financial future.

Here are some tactics to add honesty to your life and decision-making processes.

Strive to always tell the truth about money, especially to your partner. Tell your partner the truth at all times. If you make a spending mistake and charge up a bill, tell your partner. If you’re unsure about your financial state, talk it over. Don’t hide things – be open with the information and with your feelings about it.

Face the real numbers at all times. When you get a credit card statement, don’t avoid looking at it. Look at the real numbers and face it. Keep track of your net worth and update it every month so you can see your real progress – and aren’t just relying on telling yourself everything is okay.

Don’t buy without a concrete reason. Work hard to separate emotional and tangential reasons from your buying. Every time you go to make a purchase, think about it carefully. Ask yourself why you’re making that purchase, and don’t make it unless you have a real reason for doing so.

Don’t make a financial move unless you know exactly what you’re doing and why. If you’re investing in something and you don’t know why, find out why. Research your investments, know your reasons for having them (both in terms of what’s good about the investment and what your goals are and how this investment will help you reach it), and if it doesn’t feel right, don’t do it.

Being honest with yourself and with those around you can go a very long way towards keeping your nose clean in terms of financial issues. As Mark Twain put it, “Honesty is the best policy – when there is money in it.”

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  1. steve says:

    This is a fantastic post.

    Thank you and happy holidays!

  2. i’ve actually got mixed feelings about this one. You’re attaching the logic of moral failure to behaviors that can result from poor socialization, the absence of perfect information, an unsatisfying life circumstance or relationship, etc. not everyone has the clarity of vision and satisfaction in life that you enjoy. i’m not saying that you didn’t work for and deserve those things, but to suggest that these problems- which are, at the end of the day, the problems that plauge every other person in america- stem from a lack of honesty is a touch judgmental in my opinion.

  3. Mike says:

    Don’t forget our tendency to tell ourselves we’re all “above average.” That one leads to all kinds of poor investing decisions. :)

  4. Reinis says:

    There is another side to the story of Money and Honesty…

    The money itself is dishonest. Every currency in the world today is artificial. They can be created out of thin air. And it is being done all the time in huge amounts! That is the cause of inflation and financial crisis.

    The only honest money is gold. Because it can only be obtained in 3 ways – dig it up, steal it or earn it. And the last option does not seem too sweet for governments.

    PS: Keep up the good job. This is my favorite blog on personal finances for a long time already! :)

  5. Happy to see that your pastor was used as a resource for such a wonderful topic!!! I enjoyed the article.

  6. A. Dawn says:

    We have been so much conditioned to accept and feel “OK” about little lies that we don’t think of it anymore.
    A Dawn Journal

  7. A. Dawn says:

    We have been so much conditioned to accept and feel “OK” about little lies that we don’t think of it anymore.
    A Dawn Journal

  8. Johnny says:

    “As an adult, I’ve actually come back to a metaphysical sentiment that Santa Claus is in many ways real”

    Quoted for brilliance and hilarity!

    Would be a great opening liner into a short story.

  9. Dave C says:

    @#2: Lighten up Francis (if you’re unfamiliar with the internets and this meme I meant no harm, don’t get offended).

    I’d be inclined to argue that said problems a lot of the time DO tie back to a lack of honesty, usually honesty with self. Introspection? Most know not of it. I know this holds for those I know IRL who tend to have problems. Sheesh, even the specific act of conscientious spending would get them so much further than they are now.

  10. todo es bien says:

    I am wrestling with that Santa issue right now. My 3.3 year old is obsessed with Santa, in a very lovely non-materialistic way. She talks about him a LOT, even though we have never particularly focused on Santa. At this wonderful age, all she wants to do is read with him, get him a present, and cook with him, bless her non-materialistic heart. My practice in general is to be as honest with her as I am able, within age appropriate levels. Participating in maintaining the Santa thing doesnt really feel very good, though puncturing the magic of that age would not feel very good either. Strangely, I think I know what you mean about metaphysical Santa… Anyone else facing this conundrum? I imagine it sounds kind of goofy if you havent lived through it… happy holidays to all of you. jcw

  11. Anastasia says:

    Yes Trent there is a Santa Claus.

  12. BirdDog says:

    Great Post, Trent!

  13. Brian says:

    I have some questions Trent, may sound impolite, but I don’t mean anything bad by it:
    1)What is the point of reading hundreds of books, writing daily about saving and finances when at the end all your investment ends up in 2 similar index funds? Does that really require so much learning/reading?
    2)How is it that a person so intelligent, frugal, informed, educated, aware, green, etc. is (judging by the photo of you)overweight?

  14. Anna says:

    “to a fault” = excessively (Oxford English Dictionary). Nothing to do with defects.

  15. reulte says:

    Brian – #9. So, are you implying that all overweight people are stupid, ignorant, uneducated, dim, oil-loving technophilic wastrels? You must live in a very small world.

  16. Kate says:

    Hi Trent,

    Congratulations on a great post (as usual).

    I’d also add that buying on credit and living above your means is a form of dishonesty. It suggests a level of wealth that you don’t actually have.

  17. sylrayj says:

    As I read this, I was having another helping of French Toast Casserole, because it’s been a hard day. It’s not too hard to substitute ‘eat’ for ‘buy’ and ‘food’ for ‘money’…

    In so many ways, it’s all the same, isn’t it? Good habits are formed for similar reasons, in similar ways. Bad habits are noticed and recognized in similar ways, and we need to address them with methods that work for us.

    One of the things I like about The Simple Dollar is the transferable knowledge, the sharing of varied approaches to life, which we can take and apply where we see our own challenges.

  18. justin says:

    Brian, you make a great point.

  19. steve says:

    @ justin: you are just being rude. Brian has not made a point. He has asked a rhetorical question with the apparent intention to insult someone.

    @ both brian and justin: I think I speak for thousands of reader’s of TSD in saying that your rude comments are not welcome here.

  20. stephanie says:

    yes they are rude comments, but they are true.

  21. SP says:

    Steve, not just the apparent intent to insult “someone” — the apparent intent to insult all people everywhere who weigh more than Brian personally prefers them to weigh.

    On the bright side, Brian has demonstrated exactly how a person can, in fact, be honest to a fault (e.g., excessively honest). It’s not about needing to lie more, so much as it is about failing to self-edit, and then considering that some kind of virtue. (He doesn’t mean anything bad by it! He’s just being honest! What, don’t you like honesty?)

  22. Marsha says:

    Great post, Trent! And IMO, year-end, these darkest days of winter, are a fine time for soul searching. Today’s post is a much-needed alarm for me.

    Say, the fact that you said you enjoy talking with your pastor brings to mind a book that you might enjoy — Freedom of Simplicity, by Richard Foster. If you haven’t read anything by Foster, I recommend 1st perusing his bibliography to see which title speaks to you most strongly.

  23. Gwen says:

    Hi Trent. This is my first comment but I have been reading your blog for a few weeks now. I really like this post and your perspective. It reminds me of a few things you wrote about in your financial history that are similar to mine. When I was taking piano lessons as a little girl, my mom rewarded me with a candy bar if my teacher said that I was good during the lesson. I think I internalized that to mean that everytime you do something good you deserve a present. When I want to college and qualified for a $1500 credit limit no questions asked, I started rewarding myself for all sorts of things, just charging away. I was making up reasons to reward myself. I think that can be a form of dishonesty, you know, telling yourself you deserve a physical present for anything you do.
    Anyway, great post. I’m excited to read more.

  24. matt @ Thrive says:

    Getting people to face up to their finances is one of the hardest things about trying to deal with personal finance advice, and one of the things we actually struggle with a good at Thrive.

    I call it the Shoebox problem. People box up their financial woes and shove them under the bed, out of sight, out of mind. The problem is, like most things left under beds, the problem grows mold, starts to smell, and eventually crawls forth to wreck havoc on the world as the Moldy Debt Creature of DOOM!

    We’re finding ways to help people deal with their finances; thanks, Trent, for making that easier by pointing it out to people.

  25. Mark says:

    Careful thought and analysis should guide evry financial decision. Every financial decision that you make impacts your future. Bonhoeffer’s Cost of Discipleship is an excellent book. His book on Ethics is pretty good too.

  26. This is a good post. Just like the “Stop Trying To Impress People” post, it deals with some of the REAL reasons why peoples finances are in the shape they are in.

    You have to be REAL with yourself first! All of the other tips and tricks are side items. The hardest thing to do (as a financial person) is to tell them that they don’t really need your help, they just need to be honest about themselves and in a lot of cases admit that it is THEIR fault that they are where they are.

    Apparently this message has REALLY hit home for some. That may explain some of the off topic disrespect.

  27. kristine says:

    Disappointed to see Vimax ads on your site. Is there no escaping them? The one with the woman sucking on a light bulb is particulalry vulgar. I like my porn separate from my informational reading.

  28. I think this is why it’s important to have kids learn to earn their way from 6 years old right on till they leave the house. At 6, I sold bookmarks I made for $0.10/each. By 12 I was making a selling bread.

    I can’t tell you how much learning about money and control its inflow has benefited me over the years.

  29. plonkee says:

    @SP #14
    Completely agree, although I assumed (perhaps too kindly) that was what Brian was trying to demonstrate. Certainly, whilst it’s important to be truthful, one needn’t hurt people without good cause.

    If I don’t like the Xmas gifts I receive, should I be honest and say so to the giver. Common sense, compassion and friendship tell me no – I smile, thank them and move on. In fact, I’m sure I’ve read Trent say a similar thing.

    On the main point, you should alwaysa be honest with yourself both about your shortcomings, but also about your own good points.

  30. DivaJean says:

    Brian (of comment # 9)- lay off!

    Are you so infallible?

    Why the fat-phobia? Do you distrust eveything s bigger person has to say because of your perceived “moral failings” of that person?

  31. Chef says:

    Female pastor = lame

  32. Kevin says:

    kristine – try Firefox with AdBlock – I’ve not seen any ads on Trent’s site except for the book plugs, which I don’t mind.

  33. sandra says:

    yes, but if your partner wants to buy another mecanical piece for his car, but you want to pay first the last 500€ that you must pay to your father ( 500€ in my country is a one person full month salary)

  34. Amateur says:

    I think Trent oversimplifies the relationship with honesty and money. Some of these money issues some of us don’t feel are issues are deep closeted demons within someone else, to spend out of not ignorance or dishonesty but severe depression and yearning to fill voids. These folks need a lifetime of work to resolve those issues, though I’ve read many of those who managed to come out of those ruts in a span of only a few years.

    I think a better relationship is managing expectations based on time allowed to accomplish things and how much money will be gained for giving up that time. It takes quite a number of work hours to buy an object, but the return on investment may be very low if your spouse disapproves or you bought it for the sake of having/hoarding.

  35. Jon says:

    A long time ago, when I was driving to a business location I was a partner in, in order to shut it down due to an out of control partner’s shenanigans, an older gentleman driving with me said, “all the bad things people do start with a lie.” When I saw your opening line here, I flashed back to that. Honesty has far broader application than merely personal finance. Good post!

  36. Sally says:

    I think being “honest to a fault” should apply to oneself. Taking that to others can turn out to be just cruel. I’ve heard “I’m just being honest” so many times from people who have no tact/and or social skills and just want their OPINION heard – as if being “honest” makes it a fact. Being honest and telling a lie are not two sides of the same coin.

  37. Amateur says:

    @ Sally

    Those people with the “honest” stick you mention are usually people you only forgive and easily when they are close to you, truly care about you with good intentions, will actually help you in need (usually family), behave in that way. Gotta love it when they say, “Told you so.”

    When that behavior comes from people who are relative strangers like colleagues, neighbors, and those passing swiftly in your life, they’re doing it to flat out be jerks. I have heard jerks use the words “Please” and “Thank you” in their sentences, they aren’t even polite, they’re just pushing polite words around.

  38. Karen M says:

    Somehow, I think there are two separate posts/ideas going on here. Dishonesty about money and how if affects your life is one thing. Implying that all honesty, all the time is the way to live your life is completely different.

    I felt that the lead-in paragraphs do not support the financial part of the post. I agree that lying to yourself about buying things to feel better is a very poor financial choice. But I also agree with the comments that say complete honesty is just a lack of tact and/or social skills.

    Honesty about Santa Claus and honesty about how much you are saving and investing for the future are two different things.

  39. Saver Queen says:

    Trent, I think this is a great post. I agree that many financial mistakes come from the lies we tell ourselves. We tell ourselves we need it, we can afford it, we will find the money to pay for it later, when we know deep inside that it’s just not true. And we make all kinds of excuses for ourselves. Dishonesty to ourselves may not be the only problem, but it can often be our biggest hurdle to success.

    You write a well-researched, thoughtful blog and I think some other readers here are being insensitive. I’m sure debate is welcome, but insulting someone on the basis of their weight? That’s just unfair. Trent never claimed he was perfect! I think Brian and Justin are missing the point of the article.

  40. steve says:

    Rather than being limited to being a surface or moralistic concept, honesty, or both perceiving and communicating or acting appropriately on the truth, is a very deep concept. Psychological issues such as depression, unsatisfying life situations and relationships, addictions to fill emotional voids, and more are all connected to honesty in this sense. Such deeper-rooted situations are often founded in either an actual dishonesty or originating situation that hasn’t been cleared up and which have created situations or “children” of their own.

    If someone is really honest, meaning that they can see something close to the core of the truth, what they say and do can strike deep and be very healing both to themselves and even to those who are strangers to them. This is different from superficial honesty.

  41. Sweet Em says:

    In this midst of the continuous political strife about “moral issues” I have been struck by how this idea you write about today is currently having much broader impact than just our personal finances. While there is strong public debate about other “moral issues” such as same-sex attraction, abortion, etc. there is little public dialogue about honesty etc. In fact headline grabbing stories of dishonesty aren’t surprising to many of us. Suddenly, at least to my uneducated eye, it would seem that what has sent us headlong into these economic times is a culture (not just on Wall Street) of selfishness and dishonesty. Because these are faults we all share, while the “major” moral issues are things that small minorities of our society will deal with, it seems we (as a society) have been focused on the moral “motes” in others eyes and suddenly are realizing the beam in our own eyes.

  42. Sharon says:

    However, try using Meryl Runion’s motto, “Say what you mean, mean what you say, and don’t be mean when you say it.” And that is where Brian failed. Check out http://www.speakstrong.com for other great effective communication tips. If you can, get Meryl’s books and try to attend a presentation of hers. And no, I don’t get any commissions on recommending her!

  43. Brian says:

    Ok, I will try to clear up some things here. I tried to keep my post as short as possible, and because of that the very thing i was afraid might happen – actually happened. I oversimplified the question and hence did not include in it my reasons for asking, some of my opinions and some facts. I will try to correct some of it: I definitely do not have anything against overweight, obese or any other type of people for that matter. My point was only that in someones quest for frugality being overweight is the FIRST thing to deal with for many reasons. We all know that being overweight increases morbidity and mortality for humans (and other species), Think what getting sick will do to Trents savings! In also increases the public spending, insurance costs and expenses, uses more energy when travelling in whichever vehicle, consumes more food (and we all know what that means for global warming etc.). Only the fact that the clothes required are much larger than regular, meaning much more is spent manufacturing them. I could really list a thousand reasons, but we all know them and besides everyone trying to be politically correct which does no good for anyone, you could accept this PROBLEM and try to HELP! For the benefit of us all.
    Meanwhile, the children if Africa are starving…

  44. Brian says:

    and one more thing – it is now what i “personally want people to weigh”
    heard of BMI? body mass index?
    it is a clinical indicator of different types of nourishment, and obesity is strictly defined as a BMI more than 25 kg/m2 or more. Obesity is also a clinical condition – not to say disease- and like all other diseases has a WHO international code – E66.

  45. Kim says:

    It is interesting to see the mean-spirited responses to a well-meaning and helpful post which made me think. I often face the same kind of riducule by people who know nothing about my personal situation. Most of them are giving “well-meaning” and educated responses such as Brian’s which assumes that the rest of us need to hear his pet peeve. My recommendation to Brian is to start his own health & weight-loss blog. There are many people out there who enjoy being berated and preached at, so I’m sure his audience would be huge. I know that I always prefer being told what to do in that manner rather than the helpful and encouraging and self-deprecating way that Trent uses here.

    Brian’s comments about people in Africa starving are especially insulting. First of all, Trent is a charitable person, his previous posts indicate such. He is responsible as his life choices prove. Many of us who are above whatever the ideal of the moment seems to be are, in fact, charitable and concerned about the poor and the world’s hungry peoples. Does Brian make each of his decisions based upon how much money he can send to Africa? Perhaps he has determined that it is better to live on the streets so as to be able to send more funds to the poor across the world. Perhaps he goes without shoes so that another poor person can eat for a month or two. Perhaps he should sell his computer and give the proceeds to the poor all over the world. Personal choices all. I know those who do not own a television set so as to cut back on expenses to be more charitable. These are personal choices we each make.

    The only diet that has made any significant changes for me, due to a lot of health issues which I should not have to explain to a stranger (or a friend, if I don’t want to) is a completely unhealthy reduction in caloric intake which is only sustainable if one has a mental health disorder, has no access to food or lives in a concentration camp. One never knows. Additionally, what is considered healthy in our culture would have been considered unhealthy and ridiculous in other cultures at other times. I was told by a Kenyan friend of mine “in my country YOU are the ideal.”

    But perhaps, instead of us all taking grave offense at Brian’s remarks to one who we hold in esteem and affection (I know I almost feel like I KNOW Trent) perhaps we should forgive him for the flaws in his upbringing which would lead him to make such rude, disruptive, and off-subject remarks.

    Trent. Thank you for this post. It has gotten me thinking.

  46. WhirlMind says:


    I’ll agree with you on the initial introduction part , the need for honesty (well-written and persuasive) and also with the last part on how to cultivate it. (okayish and heard before, though)

    What I disagree, however, are the examples you have chosen for dishonesty in money matters. And quite oddly, this time around, not even one of them I find appropriate to the topic.

    imho, all the examples you mentioned, are “something else” defects which you forcefully attribute to dishonesty.

    1. Not planning ahead for the future – this is shortsightedness or ignorance or carelessness or being disorganized

    2. Arguing with your spouse about money – It’s quite possible both are honest, just their perceptions, preferences or knowledge/ignorance levels are different and related to other strains. I think it is this most of the time and not dishonesty.

    3. Spending money to feel better about yourself –
    Agreed this is a personality aspect that needs attention and improvement, but not deceit.

    4. Making poor investment choices – again ignorance, laziness, fear to learn, whatever but rarely dishonesty.

    Dishonesty, as I see it, most often denotes an intentional conscious distortion of truth with a specific ulterior motive, whether the motive pertains to oneself or to another. All the examples you have provided are cases where “people just don’t know” or “people think in a particular way”. That doesn’t mean repeated, deliberate, malicious intention. Most people whom you mention as “dishonest to oneself” are mostly in their own “cloud” and haven’t paused to deliberate on those things. Not that, they have thought and yet acted with malice.

    Maybe, I am just nitpicking on one word and drilling into too much into its dictionary meaning. But, when I look at it this way, I think the whole relevance of the post, rests on how one defines the word honesty for oneself.

    As to your main premise, the causes for the personal finance problems people have vary from ignorance to laziness to greed. Dishonesty is also one important reason, but the specific examples you picked don’t substantiate that. For dishonesty in personal money matters, I would think, “cooking” up bills, misreporting on your tax papers, cheating on instalments, misusing loans or lying about loan objectives, bribery are more blatant examples.

    I felt like commenting mainly because I found that, ALL the 4 examples, fall into this category, of no deliberate malice.

  47. reulte says:

    I’m all for ‘compassionate honesty’. As Sally (#26) says, so many times the excuse of honesty is simply an excuse to stir up unhappy feelings or drive wedges between people.

    Brian (#30) I think that’s just an excuse. And a damn rude one too. Do you think overweight people simply wake up one day and say “I think I’ll starve a few poverty stricken villagers in some backwards country”? Have you ever walk up to an overweight woman at a restaurant and said “You really shouldn’t be eating that hamburger, tofu is so much more environmentally friendly and less fattening to boot!” Do you have any idea WHY obesity is considered a clinical condition? Because less than 5% can be ‘cured’ (ie – diet to an acceptable BMI). Being overweight is not a personality problem but you wouldn’t know since you’ve never spoken to one. Otherwise you’d figure out that are “intelligent, frugal, informed, educated, aware, green, etc.” (although maybe not all at the same time).

    Kim (#32) I can forgive ignorance. I chose not to forgive rudeness.

    Back to our regularly scheduled program … WhirlMind – I do like that you define “dishonesty” for yourself and I think I agree with you in most cases. Arguing couples, bad investments, unnecessary purchases can be chalked up to bad comunication, bad research, bad money-control skills. The problem, I think, is that some much of what goes on in the mind is so many shades of gray. A teenager promises to call, thinks about calling, decides that maybe s/he can call later than agreed upon, decides it’s too late to call since home is only 10 minutes away … at no point is there any intentional conscious distortion of truth, but the end result is a dishonest act (promising to call; not calling). I think if there is a continuing pattern of not planning ahead, arguing, poor spending choices, bad investments; then we are deluding ourselves in some way and are being totally dishonest either with ourselves or with others. The problem is knowing when an occasional thoughtless event, such as an argument or impulse purchase, has become dishonesty to others or self.

  48. Mitch says:

    BMI is a BS way of calculating obesity. I remember reading how something like 85% of NFL players are obese according to BMI. Nevermind the fact that half of them have “six-pack” abs. Body fat percentage is a much more accurate indicator.

    Brian–the best way to conserve calories would be to perform little or no physical activity. Sort of goes against what we know about health, no? It’s estimated that 30-50% of food produced in the U.S. is wasted. Trent has provided many ways to use leftovers and store food effectively. I’d argue that his methods to reduce waste do more to conserve food than simply curbing consumption.

  49. Beth says:

    I have been reading Trent’s blog for quite some time now. I enjoy reading other’s comments as well. Up until this point I don’t believe I have heard such ill words from readers. And it puzzles me why we need comments like that wasting space. I hope this “banter” doesn’t continue. It just creates a bad vibe to an otherwise great place to read about saving money!

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