The first step in solving any problem is recognizing it. In the case of financial problems, that requires some honesty. One common theme I recognize about people with financial problems is they haven’t accepted reality. Instead, they try to convince themselves and others they are doing well financially. But, they are often ignoring or hiding from their financial problems.
Delusion, Justification & Sabotage
delusion (n): false belief that you can ignore your finances and get ahead
Pouring over all of the details of your financial life isn’t fun. But, it’s very necessary if you don’t understand where your money is going. It’s kind of like a dieter who is convinced they are losing weight, but they refuse to step on a scale. Unless you are honest about your spending, you are never going to get it under control.
justification (n): a common excuse to overspend and accumulate debt
- I can afford the payment.
- I got an incredible deal.
- I deserve it. (I’m worth it.)
- This is an investment.
People can justify anything, if they want it badly enough. This little trick of logic always says yes, even when your paycheck says no. Marketeers love justification. In fact, they practically invented the concept and they use it regularly. So, before you convince yourself that you deserve something expensive, try to remember if it was your idea or a commercial’s.
sabotage (v): to destroy your future prosperity with false values
Another reason some people have money problems is because they sabotage their finances. For example, they may dream about being having more money, but believe rich people are evil. Or, they may have financial goals but take no action towards them, because they believe abundance will be provided. Being aware of the psychology that can sabotage your finances is crucial for future prosperity.
Do you suffer from delusion, justification or sabotage?
Impressing the Joneses
If you wanted to impress your neighbors and make your friends jealous, you could buy an expensive new vehicle. It could bring immediate recognition that you are doing well financially. Unfortunately, it could also saddle you with a huge payment for years to come. This would reduce your future discretionary income, actually making you poorer, despite the fact that you look richer to others.
On the other hand, if you wanted to get ahead financially, you could pay off all of your debts and invest part of your income for your future. Unfortunately, no one would notice the progress from these actions for many years. It may appear to others like you are poorer that you really are, despite the fact you are quietly getting richer.
Is it more important for you to look wealthy or to be wealthy?
Honesty in Relationships
The biggest cause of divorce in America is financial problems. Unfortunately, I’ve watched a couple of my friends get divorced because of financial cheating. Whenever one spouse controls the finances and keeps the other in the dark, problems are likely to follow. Secret purchases, bank accounts and credit cards are sure sign disaster is imminent.
Good relationships are built on trust. And, it’s very difficult to regain trust after it has been lost. Like I have told my kids on many occasions, “if you can’t tell the truth about what you are up to, then you are doing the wrong thing”. If you can’t level with your spouse about your financial decisions, you are definitely doing the wrong thing.
Do you lie to your spouse, family or others about your finances?
The Bottom Line
The bottom line is that honesty is just a reflection of your confidence. The inability to be honest, with yourself or with others, shows a disconnect between what you are doing and what you should be doing.
“The first and worst of all frauds is to cheat one’s self.”
Pearl Bailey – American Entertainer
This post was featured on the Carnival of Personal Finance over at Credit Wise Info. If you aren’t familiar with the Carnival of Personal Finance, you need to check it out. It’s the greatest carnival on the net.
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