At some point or another, we’ve all made them with our money and personal finances. We’ll justify why we’ve spent more than saved, or explain away a problem within our control as being out of our hands: "It was the bank’s fault I was overdraft on my checking."
Excuses are made to avoid taking responsibility for our own actions when the outcome isn’t what we really desire. We’ll blame it on someone or something else and believe our excuses as the truth without examining how we can actively fix the problem.
Most money excuses are really just money myths, rooted in misinformation and a lack of knowledge. And without having the facts, it can lead anyone down the road of financial illiteracy, affecting more than 43% of Americans who fail to grasp basic money concepts or understand how personal finance works.
Have you made any of these common money excuses?
1. "I can’t/won’t/don’t know how to save money."
We can all stand to save more money, but how much of it is our own fault when we don’t even try? It’s easy to make the excuse for not setting aside a portion of our income into a savings account because we don’t earn enough, we don’t have time, or that it would take away from affording other expenses. It all plays into a mindset that no matter what you do to save, it won’t make a difference to your finances, so it’s easier not to try.
A financially disciplined person knows that it’s never too early to start saving to have a financial buffer for the future. That’s not being paranoid or stingy, that’s being smart. By taking advantage of compound interest, the money you save will earn more money -- money that can be then used to make larger investments.
If you earn an income, there’s no excuse why you can’t save today. Map out a basic monthly budget, cut down on discretionary purchases (i.e. cable, Starbucks), downsize your living arrangements, and look for sales and use coupons when it comes time to spend. Use the leftover money and save it. Your future self will thank you for it.
2. "Success is measured by the stuff you own."
I once worked with a relatively high-earning colleague who firmly believed that the true marker of success was in the number of belongings he had. He’d say things like, "I believe wealth is measured in the amount of things I own." He was also proud of the fact that he had five TVs in his house.
"Five TVs?!" I responded. I could barely afford to pay for one flat-screen TV in full.
Was his comment a display of ostentatiousness? Probably. Am I just secretly envious? Most likely. But consider what a truly financially literate person -- namely, legendary investor Warren Buffett -- has to say about wealth and material possessions.
"There are things money can’t buy," Buffett said recently. "I don’t think standard of living equates with cost of living beyond a certain point … There’s a point you start getting inverse correlation between wealth and quality of life … In fact, I’d be worse if I had six or eight houses. So, I have everything I need to have, and I don’t need any more because it doesn’t make a difference after a point. When you get to 10 times or 100 times or 1,000 times, it doesn’t make any difference."
Why do Buffett’s words resonate like gospel? Because he’s worth $65 billion in investments, yet still lives off his low-six-figure salary, in the same modest Omaha house he bought in the 1950s.
Just because you can afford to buy five TVs, cars, or houses, doesn’t mean you should; wealth is not income. True wealth is built and invested over time, not spent in gross displays of materialism. The former example is smart; the latter, just an excuse.
3. "I don’t need to check my credit report. I know my credit’s good."
Maybe you’ve had a friend or relative display this type of thinking. Maybe you’re guilty of it yourself. You don’t think it’s necessary to check your credit report regularly because you assume your credit is good. Then, you can’t believe it when you get turned down for a credit account or loan. And then you still won’t check your credit report.
Your credit report (and accompanying FICO score) contains the complete, unabridged history of your credit activity, the first and main thing a lender will look at when making a credit decision about you. If your credit is poor, it’s on account of delinquent/defaulted accounts, bankruptcies, or a host of other issues.
Why would you want to stay in the dark about it? Accessing your credit report is free, and obtaining it is easy.
By checking your report, you can review your credit history, confirm your credit score, and make changes to improve it. Credit reporting errors are not uncommon; your report may contain outdated or inaccurate information that may affect your credit score, but you can’t dispute or correct them if you don’t verify them first. Just remember, knowledge is power; plus, it feels good to apply for a loan confident that your credit score is precisely 780, right there in black and white.
4. "All credit cards lead to debt."
It’s one of those excuses where the excuse maker believes that they’re being financially responsible. The thinking goes like this:
"Credit card abuse can lead to debt. Therefore, if I never use credit cards, I’ll never go into debt."
True, you’ll never go into credit card debt by avoiding credit cards. But it’s one of the most financially illiterate things a person can do for their financial health. Simply having one or two credit cards in your wallet to pay for groceries and gas is enough to keep your credit activity revolving and current. Open a rewards credit card, and use cash back, miles or bonus points to your advantage. Pay off your balance on time, in full, each month, to keep your credit history blemish free.
Remember that you can use debit and cash as much as you like; nobody’s telling you to choose, just like you’re not being forced to max out your credit card. But if you’re avoiding credit cards altogether because you might go into debt, don’t blame the credit card; instead, look at it as a reflection of your own financial habits.
5. "Insurance is a waste of money."
Health insurance, auto insurance, homeowners insurance -- fully covered, your policies can take out a big chunk of your budget each year "just in case" something happens.
And then, when nothing does happen, it can feel like you paid up that money for nothing … that is, until something goes wrong, and then you’re hit with thousands of dollars in everything from emergency room bills, to auto body repairs or even legal fees. (Driving without auto insurance, for one, is indeed against the law.)
It’s easy to shy away from health insurance; finding the right policy can be a confusing mix of terms, deductibles, coverage differences and government regulations. But if you ask the experts, consult with a CFP, and research providers, it’ll become clear that finding the right policy is worth the time, money and peace of mind.
If you’re thinking about going insurance free, you may save money in the short term -- but you’ll be risking your health, well being, safety and yes, your finances, in the long run. And that’s one money excuse that’s just unforgivable.
6. "Personal finance is just too hard to understand."
If there’s one excuse that keeps people in a constant state of financial illiteracy, it’s this one. "Money matters are too complicated" can also be translated to "Debt can’t be avoided," "You can never stick to a budget," or "Investing is too risky."
It’s easy -- almost comforting -- to resign ourselves to making excuses and staying stuck in poor personal finance habits and modes of thinking. Yes, money can be a confusing topic. No, you might not save enough for retirement, or even live long enough to see it. You might make major sacrifices to invest or save, and find the risks outweigh the rewards.
But those would just be more excuses piled on top of one another to stay in the dark about becoming more money smart. We’d all love to have a big bank account, but reaching that goal won’t happen by continuing to make poor financial choices -- and then, refusing to change how you think and act.
Start prioritizing your financial goals, and take a good, honest look at how you’ve been holding yourself back. When it comes to staying in debt, being broke, or wanting more financial freedom, we may be our own worst enemies.
What are some other financial excuses you know of? Share them in the comments section below.