This post is by our regular contributor, Erin.
Have you ever been in denial about your financial situation?
Where you knew you were probably spending a little too much here and there, or weren’t paying enough attention to your bank account balances?
Maybe you couldn’t bring yourself to look at your credit card statements?
What’s worse is you may not even realize you’re in denial about your finances.
Whatever the case may be, denial isn’t your friend. Why? It doesn’t incite change, and change is what you need to embrace if you want to improve your financial situation.
Luckily, figuring out if you’re in denial isn’t tough – we’ve provided a list of clues below.
You Might Be in Denial About Your Financial Situation If…
You can’t bring yourself to look at your credit card statements: This is the easiest sign of denial. You know, at some level, your spending has gotten a little out of hand. You hope not looking at your statement will make the problem disappear. Well, “out of sight, out of mind” doesn’t really work when it comes to debt.
What to do instead: Be proactive and take responsibility by getting over your fears and looking at the numbers. The only way to take back control of your financial situation is to face it! You can’t make a plan to pay back your debt if you don’t know how much debt you’re in.
You think keeping up with the Joneses is necessary: The Joneses themselves are pretty much in denial. Most of them are in debt, financing a lifestyle they can’t afford because they don’t want to look “bad.” Whatever “bad” is, anyway. If you find yourself blindly following their lead, buying into things because it’s what the masses are doing, you might be in denial about what’s actually good for your wallet.
What to do instead: Take all the outside influence and pressure out of the equation. Figure out what you really enjoy in life, and spend your money on that (while saving, investing, and paying off any debt you have, of course). What has brought you joy in the last few months? What belongings of yours still hold intrinsic value to you? Focus on that. Spending to fit in with others isn’t going to make you happy in the end. You might also want to surround yourself with more fiscally-minded friends!
You’re hiding purchases from your friends, family, or significant other: Has your shopping addiction crossed the line? You might be hiding purchases around the house/apartment, ashamed to be bringing home yet another pair of shoes, earrings, or something you collect as a hobby. You know it’s bad if you’re going to such great lengths to keep others from noticing!
What to do instead: Is there anything you bought recently that can be returned? If things still have tags and you have receipts, do your best to get your money back. After that, ask yourself why you’ve been “addicted” to buying these things. Get to the root of the problem, and if possible, hold a yard sale, sell your stuff on Craigslist, or go to a consignment shop. Purge your living space and start over!
You think you can afford something because you can use your credit card for it: This frustrates me so much. I recently went to a convention and overheard a few people saying they opened a credit card just so they could go. What!?! What happened to saving in advance? (This con happens yearly, no excuses.) If you can’t afford to pay for something in the first place, you can’t afford it. Period. Don’t tell yourself otherwise.
What to do instead: Save! Figure out how much money you need, and save up for things, month by month if you have to. Or side hustle for the money. Just don’t put it on credit.
You’re putting things off for the future: This kind of goes along with the above. Charging expenses means putting off paying for something (and then paying interest). Other examples: saying you’ll start to budget next month. You’ll save $20 per week after you get your next paycheck. You’ll contribute more toward retirement after you get a raise. That’s not the way to do things, and it’s a classic example of being in denial.
What to do instead: Stop using arbitrary benchmarks like “next paycheck” and just do it now. Set up an automatic transfer to your savings account. Tell HR you want to bump your contributions up by 1%. Download a budget spreadsheet today. Why wait? The sooner you get your finances under control, the better off you’ll be.
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Being in financial denial is not fun, and it’s not very productive. Sooner or later, reality is going to hit you. Empower yourself and make the necessary changes now so you can turn over a new financial leaf. It’s better on the other side, I promise!
Have you ever been in denial about your financial situation before? What were the signs? How did you get out? How do you avoid being in denial in the first place?
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I think I’ve done all those at one time or another. It’s easy to stay in denial because there are so many people living there and you can easily fit in. You need support to live in the truth. If you can’t find that in real life, seek it online. It is much better on the other side!
These are all awesome points Erin! I don’t think I’ve ever been in denial about my financial situation, but I do know a lot of friends who currently are. I think that hiding purchases from a spouse has probably got to be the biggest sign that you know you have a problem!
Can’t talk from personal experience myself, but my father-in-law is not good with his money and he never wants to discuss it. He actually gets pretty defensive and upset when anyone in the family tries to offer help.
These are great indicators. I think a lot of people will say things like, “I’m not that good with money” or “I hate all that numbers stuff” but when it comes down to denying your situation, you need to figure out your money immediately. I love the suggestion to sell your old stuff and immediately up your contributions. Forward movement is the only possible way to get out of denial.
I’ve never been in denial, in my opinion, about my finances but I have let my approval for credit and loans be my determining factor for my affordability of an item. I’ve since decided that purchasing with cash is the best option.
I know other people who have it much worse.
Eyesonthedollar That’s a good point, Kim. A lot of people are perfectly fine being in denial about their financial situation, and it’s easy to stay when you’re following the masses.
Christina@EmbracingSimple Yeah, it’s definitely not good when you feel compelled to lie about your financial habits!
mrandmrsbudgets I have seen that more often than not, even with student loan debt. Not talking about it doesn’t make it go away!
Hannah UnplannedFinance It is! So many people are stuck in a rut and think personal finance is “boring,” but I’m sure they know, deep down, it’s an important part of life to get right.
LovetteMacc Awesome! It’s really easy to fall for credit card limits and thinking that’s money available to spend. Eventually, it catches up with you. Paying with cash is a great way to fight that.
Sadly, I see this quite a bit. It is also an easy (and very human) thing to do. I’m not anti-credit cards as I do use them, but a lot of people mistake credit card limits as income. They make $50k but have $25k available via credit, which they use to extend their lifestyle without really realizing the consequences.
ShannonRyan It really is difficult to separate the two, especially when credit card companies make it seem like you can live such a fabulous life with plastic. Instant gratification at its worst!