8 Lies You Need to Stop Telling Yourself About Money

The sooner you get yourself in good financial shape, the better your life will be.
Updated April 3, 2023
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Achieving your financial goals is as much about managing your beliefs about money as it is about managing your money. That’s why developing and sharpening your fiscal literacy should be a priority in your life, especially if you want to see if you can retire early.

In order to do that, however, you need to stop lying to yourself about how to handle your finances with both short-term and long-term goals in mind.

Here are some lies about money you need to stop telling yourself if you want to build a solid financial future.

I'm not planning to retire so I don't need to save

Jacob Lund/Adobe retired men wearing funny sunglasses drinking juice

It can be tough to save money, especially if your employer doesn’t pay you very well. However, you need to save for retirement because no matter what you tell yourself, there likely will come a time when you can’t work anymore.

You may think that you can just rely on Social Security and Medicare later in life, but those programs — equivalent to the compensation of a minimum wage job — probably aren’t going to provide for you adequately.

The best thing you can do is open a 401(k) with your employer (or an IRA if they don’t offer you one) as early in life as possible. That way you'll be prepared for the future.

I don't need to invest in the market

Looker_Studio/Adobe trader is showing a growing virtual hologram stock market graph

The investment markets can be intimidating, especially if you're new to the game. But if you want to build real wealth in your lifetime, you’re going to have to invest in it in some way. 

Letting your money languish in checking or savings accounts just isn’t going to cut it; the return on investment (ROI) is just too small.

One way to invest is with a retirement plan, like those mentioned above. You can also consult with a financial advisor who will handle all of your investments for you. 

Finally, you can set up an account with a brokerage that offers advising online, so you can learn as you go. That’s an especially good move if you make more than $5,000 a month, as it will get your money to work for you.

I don't need an emergency savings account

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While investing is the best way to boost your net worth, you also need to have a savings account in case of an emergency. We all know that accidents happen — an injury, a car crash, loss of a job — and you need to be prepared for them.

You don’t want to rely on what you have tied up in the market because it may force you to sell at a bad time. And you really don’t want to have to withdraw from a retirement account, since you’ll probably have to pay a penalty and taxes leaving you with less for retirement. 

You also don’t want to count on credit cards or personal loans since they charge interest that will compound your debt.

What you need is two to three months of your total expenses in a savings account you can access immediately. That way you’re covered no matter what happens.

I don't need to pay off my debts

Shisu_ka/Adobe man holding credit cards in hands with documents in background

We may not have any debtor’s prisons in the United States, but that doesn’t mean you can just ignore any debt that you do have. In fact, there are real consequences if you simply stop paying what you owe a lender.

If you don’t pay off your car loan, your vehicle can be repossessed. If you ignore mortgage costs, the bank can foreclose on your house. And if you stop making loan payments, you stand to face legal action and have your wages garnished. 

And, in all of these cases, debt collectors will no doubt hound you.

If you're having trouble making payments, speak to your lender about getting a deferral or making a payment plan. Communication in this situation is key if you want to crush your debt.

My credit score doesn't matter

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Not paying your debts will also wreck your credit score. If that happens, it’s important to start rebuilding your credit score as soon as possible.

One way you can do this is by getting a credit card, making modest purchases, and paying your bill off in its entirety every month. And of course, pay your bills on time.

You might think that your credit score only matters if you want to buy a house, but while your credit score will affect your mortgage eligibility and rate in that situation, it affects a lot of other things too. 

Credit scores are now a common metric used by landlords, utility companies, banks, and other lenders when considering you as a tenant or client. 

It may even be used by potential employers when you look for a job as an indicator of how responsible you are. Ignoring it now will haunt you later on.

I don't need a budget

Kittiphan/Adobe woman checking bills, taxes, bank account balance and calculating expenses

Regardless of your personal financial situation, you need a budget. Even if you make decent money, you'll benefit from keeping track of your spending. 

For one, it will help you to achieve your financial goals, such as buying a house, taking a vacation, and purchasing a car.

Budgeting can also buffer your savings by reigning in unnecessary spending. You can then invest that money or use it to boost your emergency fund. It also exposes negative spending habits, like paying for streaming services you never use.

Finally, budgeting can help you plan for a happier and longer retirement, which is beneficial for you and your family.

Renting forever is fine

StockPhotoPro/Adobe woman unpacking in her new apartment

If you live in a big city where real estate costs are high, the prospect of buying a home may seem out of reach. After all, how can you save for a down payment when the rent is so high?

To that end, you may have resigned yourself to the notion that you can just rent indefinitely. Unfortunately, that means you'll miss out on all the benefits of homeownership, including the ability to build wealth. 

According to the Federal Reserve, the average net worth of renters is $6,300, while for homeowners it’s $255,000 — a glaring gap.

If you want to make the leap to property ownership, consider relocating to an area with more affordable housing. And of course, do your best to save money.

Life insurance is a waste of money

BalanceFormCreative/Adobe female Real Estate agent offer home ownership and life insurance to young couple

While you personally may not benefit from a life insurance policy on yourself, pretending that you don’t need one isn’t a wise move. 

For one, you want your loved ones — especially your dependents — to be financially stable if anything should happen to you. You can’t put a price tag on that peace of mind.

You also want to make sure your funeral costs are covered; a morbid thought, but a practical one given how expensive they can be.

Pro-tip: Buy life insurance while you're young and healthy so you can get a large policy with a small monthly payment.

Bottom line

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Beliefs guide us through life’s decisions, and your beliefs about money are no different. You may be able to make better financial decisions if you can recognize the fault lines in your beliefs, and how they can lead you astray.

And remember, it’s never too late to start working on your financial health, even if you're trying to stop living paycheck to paycheck.

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Author Details

Cat Lafuente Cat Lafuente is a Florida-based writer and editor with extensive experience in digital and print content spaces. Her own personal finance journey — particularly consolidating debt and paying it off, in turn boosting her credit score and becoming a homeowner — inspired her to join the FinanceBuzz team; she hopes she can help others do the same.

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