3 lies we tell about money

By MP Dunleavey

Editor's note: Join columnist MP Dunleavey and a group of women as they seek to strip away the myths around money, liberate themselves from debt and find financial sanity. Follow the ongoing quest of the Women in Red every other Wednesday in Dunleavey's column on MSN Money.

The longer I work with people and their finances, the more I realize that nearly everyone employs half-truths, white lies, sins of omission and other types of financial fiction when dealing with money issues.

The motivation, of course, is self-protection: If we don't tell the truth to ourselves and others, maybe no one will know . . . maybe the problem will disappear!

But in most cases the dishonesty not only backfires, it makes financial matters worse.

You can't make a complete financial transformation until you learn to spot the ways you may be less than honest about your own money picture -- and face your financial reality. Here are the three big ones:

1. The lies we tell ourselves

Avoiding the truth about your finances is really easy. I used to do it all the time. The trouble is that the lies we tell ourselves about money are hard to spot, because they are often couched as Really Valid Reasons.

Sheila Adam, who works in publishing in Los Angeles, knows the downside of that delusion. A few years ago, Adam was working at Saks Fifth Avenue, was hooked on celebrity magazines and couldn't restrain her spending sprees.

One temptation was her employee discount, but the other was from page one of the self-deception handbook: "I saw all these people with designer stuff, and I said, 'I can buy this too.' I had no business buying a pair of Jimmy Choo shoes, but I did."

Here are some other financial cover-ups you may have used:

• "I've earned it."

• "If she can afford it, why can't I?"

• "I make (insert dollar amount here). I should be able to live better than this."

• "What's the harm? I hardly ever buy myself anything new."

These rationales are externally driven. When you compare yourself to others or to a certain ideal ("all my girlfriends have one"), you avoid dealing with the realities of your own bank account.

Why the lie:

Money problems are painful: Being in debt, not being able to afford what you want, being envious of the financial lives of others -- they literally hurt sometimes.

• Talk back: Do you lie to yourself about money?

The need to assuage that discomfort is only natural, says Susan Spieler, a psychologist in New York who helps women and families deal with money issues. "But people want to put blinders on. It's not rational, but it's understandable when there's something painful you want to run away from."

The trouble comes when denial becomes your primary way of coping -- and you avoid reality by overspending, not staying on top of your debt, trying to buy what others have and other financially damaging behaviors.

2. The lies we tell others

These financial fictions are much easier to spot -- who doesn't know when they are lying to someone? -- but they are harder to correct for the following reasons:

• You feel entitled to your privacy. "Hey, my money is nobody else's business."

• You don't want to look bad. "If I told even my best friend about how much debt I have, he would think I was an idiot."

• You know you're about to fix the problem. "There's no point in telling anyone we're behind on our mortgage -- I'm about to get a raise and everything will be fine."

The nugget of truth here is that you really don't have to tell anyone the truth about your financial life . . . unless hiding the financial facts is getting or keeping you in trouble.

Continued: Denial not a 'fully conscious, deliberate' act

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