The 5 Lies About Money You’re Still Telling Yourself


Are you being untruthful?  Don’t worry, we can all relate. Here are the lies about money I’m sure you’re still telling yourself.

1. Planned spending is savings

This is the biggest I know when it comes to lies about money. It feels good to have money in the bank, but if you’re planning to dump it all on a major purchase like a vacation or a car, it just doesn’t count. I’ve long abandoned the habit of counting my vacation fund in my net worth calculations, and you should too — because it doesn’t count.

If you’re going to dump your cash into something that’s going to eat it up, like a wedding or a car, it’s not an asset. Let’s all stop kidding ourselves and be honest about what’s really savings, and what’s just planned spending.

2. You get to spend your gross income

I’ve lamented about this one before, but I feel the need to say it again because we all seem reluctant to accept the truth: we do not take home our gross income. This is the worst of the lies about money you’re probably telling yourself!

If you’re using Gail Vaz Oxlade’s budget pie, you’re going to run out of money before you run out of slices. Next time you get excited that your housing costs are less than 35% of your income, make sure making this calculation with your net income, not your gross. You don’t get to spend your gross, you spend your net. Your gross income is purely for ego. The sooner you realize that, the better off you’ll be.

3. You don’t need to invest in tax-advantaged accounts

The TFSA (tax-free savings account) is the best retirement savings vehicle available. Yep, you read that right. 

You should focus on maxing out your TFSA before you put any money into your RRSP. If your income is over $50,000, you might want to contribute to both, as RRSPs will give you a tax break at the end of the year. Saying you don’t have enough to save is one of the lies about money I hear over and over again.

4. You have to finance a car

I drive a vehicle you might be embarrassed to be seen in because the car is as old as I am. Thankfully, it only leaves the parking garage about once a week to go to the grocery store. The rest of the time, I make use of public transit or my own two legs to get where we need to be.

RELATED: How to Pay Off a 7 Year Car Loan in Less Than 4 Years

In a world where everyone thinks it’s normal to have a car payment, I am a total weirdo. But I’m going to let everyone in on a big secret: you don’t have to finance a car. You can save up a few thousand dollars and buy a car that costs that much!

If you want a nicer car, then save up more money, but this idea that there’s such thing as a “down payment on a car” needs to stop. If you can’t buy a vehicle outright, you can’t afford it. This is one of my most hated lies about money!

5. You don’t have to invest

Some of the saddest stories I’ve ever heard are people that have tens of thousands of dollars… sitting in a chequing or savings account earning nothing or next to nothing in interest. Young people are so wary of the stock market sometimes it’s hard to convince them, but the reality of the matter is you can’t afford to not invest.

If you’re keeping your money in a chequing or savings account, it’s not even keeping pace with inflation, which means rising prices are actually eroding what you’ve put away. You’d actually almost be better off spending your money than saving it this way because it will buy you more today than it will in the future. Wow isn’t that depressing!  Don’t delay getting started investing, start now and set yourself up to be wealthy for the rest of your life.

Which of these likes about money have you been telling yourself? Anymore money lies I missed?

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25 Comments. Leave new

  • I admit to No 5 – I have more money sitting in a savings account than I have money invested.

    My savings account is earning just 2.85% in interest. I think I’d reap more benefits if that sum was invested in the stock market though, so I’m educating myself.

    II played the ASX sharemarket game that’s just ended which was amazing. It ran over the course of 3 months. Everyone was given a virtual 50k to invest. There were 16,965 registered players by the cut off date. I ended up finishing In the top 100 (36) with a portfolio value of 58,404.89 BUT the winner finished with 167,988.19 (she won 8k which was well deserved!) second place won 5k and third 3k. In the end only 24% of players were in profit.

    The next game goes from 26 Feb – 10 June so I’ll be playing again because you learn so much, they have web tutorials and numerous resources.

    Maybe then I’ll be confident to invest for real.

    • Jaye, there are much safer bets than playing the stick market which will/can give double-digit returns…

  • This is great! Love this: “Your gross income is purely for ego.” SO true. And, I’m right there with you on not needing to finance a car–there is absolutely no reason to do so! Our car is an 18-yr-old minivan that looks like a hunk of junk but drives just fine. And #5 is crucial!

  • #2 so much! I don’t understand why ANY financial calculations use your gross income. Like you say, gross income is for ego, net income is for everything else.

  • Although I see what your getting at for #1, but isn’t all savings planned spending? In the end I plan on spending it on a house, or to spend it on everyday items during my retirement, but the basic plan is always to spend it. Long term savings is still savings that will be spent, just not right away.

    • I agree — though I definitely feel if spending the money is off the table for 25+ years, it’s less of planned spending.

      I feel like a significant portion of what I’m saving isn’t planned spending — it’s planned passive income generation. I want to build up a significant amount principal that won’t be spent, but will just serve to generate interest & dividends for spending.

  • Wondering why you guys have a car at all if you only use it once a week for grocery runs. Wouldn’t it be less expensive to just call a cab for the ride home with all your groceries? Probably less than the cost of insurance.

    • It’s about $70/mo for insurance and then $40/mo for gas. Hard to say if a cab would be cheaper, as we drive to and from the grocery store — we’d essentially be paying for at least eight 15minute taxi trips per month, which can add up.

      We keep it solely for convenience factor. It’s nice to have on hand if we go to visit friends/parents that aren’t on the train route or if we need to lug something home from Ikea.

      It’s not worth it to get rid of it just to save $110/mo. The convenience factor of having it is worth more than that.

  • We do number one, sort of. I like to focus on the % we live on rather than save. Who knows if we’ll actually spend the money in the end on what we think we will. Just freeing up that money to do something is worthwhile to me.

  • A vacation is short enough term that I don’t count it. I’d count savings for a car, because you then turn it into a depreciating asset that can be reverted to cash (at a loss, of course). Similar to a house downpayment, if you go that route. I don’t know if I’d count the wedding or not. Probably not.

    Like Jessica said, all savings is just delayed spending at some level. Except for those who plan to achieve financial independence, which I know you do. For a lot of people, they do plan to spend their retirement funds, not just the earnings on them.

    Net worth and investable assets are two different things that both should be considered.

  • I love #4! I have an 8 year old station wagon that my dad found reasonably cheap and I love it. Even more than I love the car, is the fact that I don’t have a monthly payment for it! I really don’t understand people who spend a huge chunk of their monthly income on a car, and I really don’t get people who lease and constantly get a new car.

  • I am so with you on #1! I do count my planned spending money in my net worth, but then it goes away once it’s spent, so I think that’s fine. I don’t count it as savings in my savings calculations though.

    I was pretty wary of investing until after I was out of college, despite the fact that I had over $30,000 in the bank! There were just too many unknowns. It’s fine now, but only because I got a high paying job and knew that I definitely didn’t need all of my income, so I could invest that income away for future me.

  • Love this! I don’t have a car and I always think of net income — you need to work with what you are actually taking home! I do need to get started with investing though….

  • Sadly I’ve heard #5 come up a few times. I know some people still too scared to invest and they prefer to have huge amounts sitting in bank accounts earning nothing. I don’t get it at all!

  • Here’s a lie I tell myself about my money: it’s better to save money than make money. For some reason I seem to get more joy from from saving dollar than spending a dollar. It doesn’t help credit cards make painless spending easier than ever.

  • Great post!! Your post on increasing your net worth actually got me thinking about #1, so I decided to exclude my planned spending/savings in my calculations. I learned #4 the hard way, but at least it was at 0% interest. A question on your networth calculations, should I consider money I pay into a pension plan? Also, should I consider my employer’s contribution?

    • Yep! If you receive it directly, I would count it.

      If there’s any strings attached (ie. you have to stay with the company at least 2 years, etc) I would wait until those conditions pass to count the funds as part of your overall NW.

  • So on point, especially with net vs. gross income and future spending money is not savings… I’d add a few more lies I hear all the time to the list: making minimum debt repayments is fine, you can afford the house mortgage that you’ve been pre-approved for, and it’s OK not to know a whole lot about your money…

  • Barry @ Moneywehave
    December 15, 2014 11:07 am

    I definitely consider planned spending savings e.g. my vacation account but that being said I don’t count it towards my net worth either.

    The main reason I do this is because that planned spending won’t be used on credit. Of course when I do my savings rate calculations I calculate it with and without planned spending just to see where I’m at.

  • I love this list! I feel like people thinking spending money on a car is a given, when in fact it’s one of the biggest expenses most people have. I’ve had so many people say crappy things about my car, but I don’t think they realize it’s why I was able to pay off my loans so quickly. Great post!

  • The one disagreement I sort of have is with financing a car. If you have the money to buy a car but can fiance it at 0% does it not make more sense to put that money in to something like a savings account where it can work for you. As long as you are disciplined and won’t spend that money.

  • Gr8 article Bridgette! Thank you for sharing!

  • Good point on investing. Low cost Index Funds are the way to go if you want exposure to the market without doing any of your own homework/research on individual stocks or sectors.
    ETFs (Exchange Traded Funds) offer much lower fees than mutual funds and the majority of mutual funds will under-perform the index anyway. A win on fees and a win on performance.


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