Humans are masters of self-deception. We tell ourselves little lies every day in order to make our present situation or behaviours suit our expectations and beliefs. In short, lying makes us feel better. It seems harmless, after all, does it really matter if you tell yourself that someone doesn’t like you because they’re just jealous, or that if you just had more time you would write that book or take that course? Well yes, it does. Lies cost. When you lie to yourself, you deny yourself the chance of doing better. And when it comes to lies about money, that denial fuels the enormous debt crisis facing South Africa.
See if you recognise some these common lies as part of your daily conversation with yourself.
If I use my savings now, I have plenty of time to put them back.
If saving was easy, everyone would do it. Saving takes a lot of commitment and self-control. If you take from your savings now, what will stop you from doing it again when you have another excuse? What’s more, once you fall behind, it is very difficult to catch up and pay yourself back. Plus, you’re losing out on all that valuable interest. Your savings need to be considered untouchable for anything but what you intend them for.
I am young, I have plenty of time to think about my finances.
This goes hand-in-hand with the above lie. While it’s true that youth is your friend when it comes to financial planning, you have to take advantage of it at the time. By making good financial choices from the moment you start earning, you can ensure your future is financially secure. Start saving, even if it’s just a little. Make and stick to a budget. Avoid debt. Click here to start saving today.
All I need to do is earn more money and I will be fine.
That’s a lot like telling yourself all you have to do is win the lottery. Good money habits are good money habits. People can blow millions as easily as they can thousands. It’s about having respect for money and the role it plays in your life. If you don’t have healthy habits, then every raise you get will lead you further into debt.
I can’t afford to put anything away in savings.
But you can afford that expensive coffee every morning or a new book every week. I don’t know how to say this any plainer – putting money away in savings needs to be part of your budget plan no matter how much money you have or don’t have. In fact, not having a lot of money should be an even greater incentive to save some of it. After all, it’s the only way you will be able to afford future luxuries or to cover an unexpected expense. And believe me, unexpected expenses happen. A lot.
If I buy it on credit, I can afford it.
Whether you buy it on credit card or through store credit, credit costs a lot of money. According to Neil Roets, CEO of Debt Rescue, more than 50% of economically active South Africans are over-indebted, which means they are in arrears on at least three payments. Credit is expensive, high interest rates mean that more and more South Africans are paying large amounts to service their debt. Credit has its uses but it’s not another way to spend indiscriminately. Click here to learn how to make the most of your credit card.
I have worked hard, I deserve this.
Well, this may not be a lie, but it’s dangerous. Of course, you deserve a reward for your hard work, but more than that, you deserve to have the benefits of not struggling when you retire. Which well-earned reward, would you rather have?
Having debt is normal.
Yes, it is. That doesn’t mean it’s good. Sadly, our normal is 75% of South African consumers owing 75% of their salary to creditors (source: www.pa.org.za). Normal is only 6% of South Africans being able to retire comfortably. If normal is your bar of measurement, you are in big trouble. Be the exception, not the rule. Read about the emotional side of debt here.
As soon as I sort this out, or no longer have to pay that, I will start saving.
Most people don’t have the luxury of having the perfect situation. There is always something that you need to spend money on – a car service, a leaky pipe, new school clothes. Unless you are Warren Buffet, money will always be a juggling act. You have to make sure that the thing you prioritise is savings.
It’s easy to lie to ourselves about money. It’s also convenient because it prevents us from making difficult choices about our money habits. But knowledge is strength so, by understanding where your lies hamper your ability to improve your financial situation, you can start working on changing your destructive behaviours and beliefs.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.