THEY’RE the little lies we tell ourselves to justify being financially lazy. The excuses we use to take a shortcut which can cost us big-time in the future.


Deep down we know we’re just fooling ourselves but we do them anyway. OK, it’s time to toughen up. To stop the lies. Avoid the easy way out and put in the hard yards to make a financial difference.


It’s time for a dose of truth.


* As long as my job pays well, it’s OK if I hate it


Staying in a job that you hate, even if it pays well, means you don’t have your heart in it, there will be no commitment, no passion and your boss will eventually latch on. Inevitably, you’ll be the first one to go in any redundancies and the one overlooked for any promotions. More passionate colleagues will leap ahead and you’ll be left wallowing in self pity. Success comes easiest to those who love their job. So improve your skills and do something you love. It can be scary to make a change but it’ll be worth it.


Have enough confidence in yourself to give anything a go, but if it doesn’t work out, have enough confidence to go and do something else.


* If I turn a blind eye, somehow my finances will work themselves out


No, they won’t. You’re the only one who can work your way out of a financial jam. Start with a plan that involves either cutting back expenses or earning extra income to balance the books. Set a goal on how much more you’ll earn and how much less you’ll spend for a set period of time.Read the plan regularly to keep you on track and make sure to divert the extra money to where it’s needed – paying off big bills for example.


* I should buy a home because that’s what grown-ups do


Buying the Australian dream has been the cornerstone of building wealth in this country for generations. It was almost a rite of passage to marry and buy your first home. Not so much any more. We can give you a very convincing argument that renting is the better financial option. But, and it’s a big but, the argument only works if you have the discipline to invest the difference between the rent you pay and the mortgage repayment you’d have to pay in other assets. It means working out that gap and religiously investing that amount in shares, managed funds or investment property.


If you don’t have that discipline then it’s better to buy a home and focus on paying down the mortgage as your investment strategy.


* If I dip into my savings now I can always make up for it later


And pigs might fly. It is just so easy to raid your savings for some sort of extravagance on the promise you’ll pay it back. It’s way more productive to leave your savings untouched and earn extra to pay for the item or experience. So you get what you want, you’ve worked harder for it and appreciate it more but those savings are still there.


* If I get approved for a loan or credit limit increase, I can afford it


This is probably the most dangerous of all lies. Forget what the bank is offering in terms of increased credit card limits or loan amounts, only you really know what you can afford. We have a daughter who worked out her budget on what home loan she could handle. She, and we, were stunned when the bank offered double the loan size. She declined and stuck to her budget.


* Over the medium to long term, investments will always go up


No, they don’t. A bad investment can go bust over the medium to long term as well. It depends on the investment. Assess each investment on its merits. It’s often better to get rid of the “dogs” early rather than ride them into the grave.


* I’m too inexperienced to start investing


Do something about it. Every bank has a team of financial planners sitting and waiting for you to call. Start reading the finance pages of the newspapers, go to seminars, look at investing in managed funds where professionals make the investment decisions for you. These days help is easily available, so it’s no longer an excuse to plead ignorance.


* Everybody works until full retirement age


The fact is only 20 per cent of people retire when they had planned too. The other 80 per cent have the decision made for them either through redundancy, illness, disability or death. Always plan for an early retirement and treat any extra as a bonus.


> Other Myths


The Joneses next door have everything and live on easy street.

Bricks and mortar never go down in value.

Never sell and you’ll never make a loss.

Investing in shares is like making a bet at the casino.

Diversification guarantees no losses.



EVERY year the world’s best investor, Warren Buffett, sends his famous letter to shareholders of his investment company Berkshire Hathaway. It’s a sort of investment version of Moses from the Mount.”More than 50 years ago, Charlie told me that it was far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price,” Buffett writes, referring to his Berkshire business partner Charlie Munger.


“The immediate future is uncertain; America has faced the unknown since 1776. It’s just that sometimes people focus on the myriad of uncertainties that always exist while at other times they ignore them,” he also writes.


It is also worth reminding ourselves of his five fundamentals of investing in shares:
* Do I understand the nature of business?
* Is it run by people I admire and trust?
* Does it have a lasting competitive advantage?
* Is it the right price?
* If yes to all the above, then do the deal.