Sometimes we’re our own worst enemy. It’s not different when it comes to our personal finances.
When we want to make ourselves feel better about our finances, we often tell ourselves little lies to make it seem better than it actually is. The trouble is – if we do it too much, we may end up believing them.
That’s why it’s so important to recognize the money lies we tell ourselves so we don’t perpetuate them and to fool ourselves. Here are some of the most common money lies we hear …
“If I take money out of my savings account, I’ll pay it back later.”
When the money is right there in front of you, it’s easy to make up an excuse to access it. However, the sad truth is that very few of us actually end up paying ourselves back.
Remember this – if you don’t have the money to pay for something without tapping into your savings, then you probably won’t have the money later on to pay back your savings. Instead, you should ask yourself if the purchase is necessary at all.
“I’m too young to start investing.”
This is an easy trap to fall into, because most of us fear what we don’t know. But it’s important to realize that you don’t have to be personal finance whiz to start investing.
The easiest way to start is to invest in your retirement savings – especially if your employer makes matching contributions. Talk to your HR department; they can walk you through how to contribute. By starting early you’ll see larger returns in the long run!
“I’m not buying a house, so why worry about my credit score?”
Applying for a mortgage isn’t the only time your score comes into play. Your credit score can save you – or cost you – a lot, depending on how high it is. It helps determine what kind of interest rate you are offered on loans. It informs what you will pay for car insurance or other insurance policies. And it can keep you from renting an apartment or a rental car.
Make it a habit to check your credit report on an annual basis and address any issues you see immediately.
“I won’t need as much money when I’m older so I can just live off of Social Security.”
Quite the opposite is true. As you age, your expenditures are likely going to increase, and a big part of that is medical expenses. Other big unexpected costs people have after retirement are making improvements on older homes, helping children who are in financial trouble, higher taxes, living longer than expected and inflation.
The truth is, Social Security was never meant to be the main source of retirement income; it was created to be a safety net. If you don’t think you have enough money for your retirement, make sure you are contributing to your employer’s retirement plan, and if need be, set up an IRA to contribute even more to your nest egg.
“Things will be ok in the end.”
Turning a blind eye to your finances is not the solution for successfully managing your finances – especially if you’re in debt.
Rather than convincing yourself you are powerless, recognize that it is within your power to change your financial situation. Make a commitment to address any money issues you may be facing head on. Check your bank account regularly, request your credit report and take advantage of any retirement plans offered by your employer.
If you have any questions or need some advice along the way, don’t hesitate to reach out to your local MidWestOne banker. They’re happy to help!