In order to ensure that you will have a healthy financial future, be honest with yourself about your finances. Many people who end up having financial hardships are in those situations because they were not honest about their finances. There are some common lies that people tell themselves that lead them down the wrong financial track.
“I Have More Good Debt than Bad”
Many people believe in separating debt into good debt and bad debt. Good debt is typically considered student loans, mortgages, or car loans, where bad debt is usually from credit cards with high interest rates. Even though some debt is better than others, it is best to avoid all debt. Obviously, you can’t realistically do that, but don’t trick yourself into calling anything “good debt.” If you consider all debt to be bad debt, you can aggressively get rid of it.
“The Stock Market is Always Profitable”
You cannot judge your returns from the stock market based on past performance. Based on historical averages, money in the market will generate a return, but this does not guarantee future results. Also, be sure you have a true understanding of how well your investments are actually doing.
“I’ll Have Time to Save for Retirement”
We often tell ourselves that retirement is a long way away, or that we will save in the future when we are making more money. The longer you wait to save up, the more you miss out on compounding returns. You may want to consider your retirement fund to be the first bill you have to pay each month. While you’re missing out on that money as you’re saving now, it will benefit you in the long run.
“I Deserve To Have this Treat”
While sometimes it is okay to splurge on one item or meal, making it a habit and tricking yourself into believing that you deserve it every time can lead to financial hardships. Also, just because you used a coupon or bought an item on sale doesn’t mean that you are actually saving money. You are still spending money on the item, regardless of how much you saved.
Take a look at your finances and see what lies you may be telling yourself. Grab hold of your finances and lead yourself into better financial wellness.