Financial Fibbing: How Lying to Yourself Can Help You

Financial Fibbing: How Lying to Yourself Can Help You

“It’s only three bites. I’m not really eating dessert.”

Oh, the lies we tell ourselves ... about dessert, the number of times per week we'll make it to the gym and the choices (good and bad) we make with our money.

We don’t lie to ourselves all the time, of course, but--just like justifying why a little bit of cake is okay, and therefore not stuffing ourselves--some of the lies we tell ourselves can actually help us get closer to our goals.

So says Professor Dan Ariely, author of the new book “The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves.” The way we fib to ourselves can make a big difference for our money, too.

Today, we'll help you tell the difference between good lies and bad, and harness the power of the good ones to achieve all of your goals, financial and otherwise.

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One Simple Question to Tell Good Lies From Bad

Ask yourself: Does this lie get me closer to my goals?

According to Ariely, we often lie to ourselves when we want to achieve something. Specifically, we justify our slip-ups en route to difficult goals so they seem less grave. That helps keep us on track, particularly because our fragile egos don’t like to face defeat.

RELATED: Checklist: I Want to Set Financial Goals

Good lies help you focus on the positive without getting bogged down by the negative. (i.e. "This is the amount I 'get' in my paycheck and it's all I can spend--so let's enjoy it!" vs. "By saving that $500, now I have less I can spend!")

Other good financial justifications that move you closer to your goals:

  • "I spent a little more this month than I meant to ... but I'm going to ignore that and move on to my goals for next month!"
  • "I know it's best to max out my IRA for retirement by contributing $416 a month ... but I can't swing that right now, so I'll contribute $200 instead, and that's great!"
  • "I don't have as much cash on hand for gifts this year, but handmade items show I care even more!"
  • "I did a great job of staying on budget this month, so I deserve a cupcake to reward myself!"
  • "Sure, I'd love a bigger or fancier place to live, but I'm happy where I am now. A bigger place would be that much harder to clean!"

How to Spot a Bad Lie

When it comes to financial fibs, Ariely says: "Lying to ourselves in the financial domain mostly comes from not thinking about the real consequences of our actions. When you say to yourself ‘Oh I have enough money’ or ‘This really doesn’t matter,’ you're not thinking about the long-term consequences."

Instead, he says, bad financial lies are justifications that hurt us in the grand scheme: "It’s like turning a blind eye or 'comfortable forgetting' ... It’s incredibly dangerous, and I think that the role of financial advisors is to prevent us from doing this." (Need to find a financial advisor? We can help.)

In a nutshell, bad lies can further you from your goals--and, in the worst cases, hurt others and breed even more lies.

Here are some examples of bad lies about money:

  • "I spent more than I meant to this month ... but it never makes a difference, anyway!" (keeps you from reaching your savings goals)
  • "I don't have as much cash on hand for gifts this year, but I bet everyone will understand if I show up empty-handed." (hurts others)
  • "I did a great job of staying on budget this month, so I deserve a weekend getaway to reward myself!" (furthers you from your goals)
  • Rounding up your salary numbers with your significant other ... which then sets expectations for what you can afford and how much you can pitch in, later in your relationship. (breeds even more lies)

Before buying into your own fibs, try to step back and see the situation for what it really is. As Ariely explains, when we repeatedly tell ourselves the same lie, we’re much more inclined to believe it’s the truth. “We’re storytelling creatures by nature,” he says. “We tell ourselves story after story until we come up with an explanation that we like.”

Our bad lies trap us in a world of make-believe, so if your "stretchings" of the truth start to swell, take a step back. Evaluate why you’re lying, and whether your goals are achievable.

Using the Good and Avoiding the Bad

For the most part, your intuition will tell you if your lies are helpful or harmful. If your lies are the bad kind, you’ll probably find yourself justifying your mistakes to shield yourself from a truth you don’t want to acknowledge.

When your lies are good, they’ll empower you by giving you the confidence to disregard small stumbles and achieve your goal.

So go on: Eat the three bites of dessert. After all, there are ways that splurging can help you.

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