9 signs you're lying to yourself about money
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- Honesty goes a long way in personal finance, and we have to start with ourselves.
- If you tell yourself you don't need to save for retirement because it's years away or that it's OK to have debt because everyone else does, you have some work to do.
- Replacing our white lies about money with action and good habits clears the path to wealth.
- Read more personal finance coverage.
Before the new year rolls around, take some time to audit your financial life.
It's easy to make rationalizations when things aren't going our way. But if you pull back the curtain and identify the source of the issue — and the white lie that's masking it — it becomes easier to kick bad habits and clear the path to wealth.
If you've uttered any of the following phrases, it could be a sign you're lying to yourself about money.
"I don't need to worry about retirement for years"
PHILIPPE HUGUEN/AFP/Getty ImagesWhy it's wrong: Retirement is one long-term financial goal that everyone should plan for. Look at the number of years you have until retirement as an advantage, because exponential growth depends on it.
How to improve: If you have a workplace retirement plan, like a 401(k), start contributing as much as you can immediately. Defer enough of your salary to at least score your employer's match (if there is one) and increase it steadily from there.
Perhaps most importantly, start thinking about what your ideal retirement looks like, even if you plan on working forever. Figuring out how you'll spend your time and where you want to live can go a long way in estimating costs and motivating you to save.
"Disability and life insurance can wait"
Sajee Rod/ShutterstockWhy it's wrong: Having insurance is like carrying an umbrella — you may not need it, but you'll sure be glad you have it when the storm hits.
If your career is your largest asset, a temporary or permanent loss of income can affect you and your dependents greatly.
How to improve: Your employer may provide short-term disability insurance or life insurance at group rates, but if you support anyone — children, a spouse, or otherwise — and rely on a steady paycheck to pay regular bills or stay on track financially, you probably need additional disability insurance and/or life insurance.
Disability insurance can help replace lost wages if there's an accident or illness that keeps you from work for a period of time. Meanwhile, life insurance provides a chunk of cash to your beneficiaries if you die prematurely — and the younger and healthier you are, the cheaper it will be.
"I've got my savings under control"
Flickr/Scarleth MarieWhy it's wrong: If you're not saving money automatically, you're at a major disadvantage compared to those who are. When you pay yourself first, there's little to no effort involved. Why not make it easier?
How to improve: If you're just kicking whatever cash you have left over at the end of the month into a savings account or retirement account, there's a better way. Set up automatic transfers, direct deposit, or make use of your employer-sponsored retirement plan to save pretax money.
If you're saving for short-term goals in an account earning less than 1% interest, you can do much better. Pick a high-yield savings account with no fees and high APY and watch your money grow.
See the rest of the story at Business Insider
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