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Money Lies and Financial Dishonesty

Money Lies and Financial Dishonesty

“The slickest way in the world to lie is to tell the right amount of truth at the right time-and then shut up.”― Robert A. Heinlein

Detecting Lies and Half-Truths

I have a knack for evaluating a person’s character quickly and accurately. A friend of mine calls it a unique sixth-sense; an uncommon ability to recognize the truthfulness and sincerity in a stranger’s words.

I can read body language like a psychic reads tea leaves or a palm reader examines the lines in your hand. I recognize the subtle physical clues others can’t see or choose to ignore.

The truth often reveals itself through unusual hand gestures, facial expressions, vocal changes and eye movement. In person it’s easy for me to spot the discrepancies between baseline behavior, (what’s normal in non-threatening conditions), and the atypical body language of someone who is acting dishonestly.

This works great when I meet someone face-to-face, but unfortunately it has no relevance in today’s digital world. These days we are masked by the Internet. We are hidden behind computer screens where facial expressions and body language are no longer visible to those with whom we communicate. We coexist in a binary, data-driven society that provides zero clues about our honesty. It enables us to invent things like ‘fake news’.

As I sit in front of my computer screen I can’t observe the emotions and mannerisms of the story tellers weaving their tales. None of us can, so how can we distinguish fact from fiction? Are we being told the truth, a partial truth or an out-and-out lie?

How often are people honest on the Internet particularly when it comes to money? How often do you believe the presented facts and how often do you question them?

Are we Being Honest or Crafting an Illusion?

As a personal finance enthusiast I’ve read a lot of blogs about money, income, success and failure. As a blogger I’ve written over 1700 posts on those same topics. I’ve used this blog as a online financial journal of sorts. The story began a few years after graduation and has continued, (except for a short hiatus), for more than thirteen years.

All along the way I took pride in my honesty and integrity. I told the story to the best of my ability. This is my truth, or so I thought, but as I read the words of others I’m not so sure.

As personal finance enthusiasts and bloggers are we telling the whole truth or are we inadvertently crafting an illusion of what we’ve accomplished and who we are?

Money Lies

In 2018 the National Endowment for Financial Education (NEFE) conducted a survey about financial infidelity. Forty-one percent of respondents admitted to committing financial deceptions against their partners and spouses. Two in every five respondents admitted to being dishonest by hiding purchases, bank statements and cash or lying about their debt and income.

If we can’t be honest with those we love it’s pretty easy to assume we aren’t telling the truth online either. It takes little to no effort to alter financial figures or create fictitious net worth charts and diagrams.

As an anonymous blogger I can weave my tale any way I choose. So can every other blogger out there. Some tweak the truth purposefully while others do so unintentionally or even accidentally.

We can compel readers to trust our words all the while misleading them about our background and history. We can twist the story to tout our success or make our journey appear more difficult than it actually was.

Let me provide you with a few examples.

Real Estate Half-Truths

I recently met an eager twenty year old who tried to sell me on the art of real estate investing. “I earn $12,000 a month buying, selling and renting houses.” he said with a wide grin.

“$12,000, before or after taxes?” I ask. His grin begins to fade ever so slightly. “Before taxes,” he says.

“So you earn “$12,000 every month buying and renting houses?,” I ask. I stress the word “every” because I am genuinely interested in the details and $12,000 is a decent chunk of change, particularly for a twenty year old.

“Oh, well not every month,” he says, looking down ever so slightly. “Actually August was a very good month.”

Now let’s be clear. This personable young real estate investor wasn’t lying. He probably did earn $12,000 one month, but that doesn’t mean he earns $12,000 every month.

He’s mostly telling the truth, right? So what’s my complaint? After further discussion this enthusiastic young man told me he earns closer to $8,000 per month. There is a world of difference between $12,000 and $8,000. In fact, the difference is $48,000 per year.

Manipulating the Numbers

Honestly, I don’t even know if $8,000 a month is accurate. How long has he been earning that income, how much does he pay in expenses, HOA fees, repairs, property taxes, etc?

When we talk numbers we can manipulate the data. What this guy earns from rental income and sales is only piece of the entire puzzle. There are many expenses and headaches involved in owning real estate. He didn’t mention any of those as he tried to sell me on his ideas.

In isolation we can make our numbers look unbelievably impressive. We can convince other people that we are successful. We can also convince them to buy our products, click our links and follow our advice.

This real estate investor told me housing prices never go down in the city where he’s buying, but a two second Google search proves he’s wrong. Is he ignorant of the facts or purposely trying to mislead me?

money lies falling house prices

Blogger Exaggerations

Here’s another one for you. I recently met a blogger who told me he earned a LOT of money from advertising revenue and affiliate links. I think that’s pretty cool. I’ve never looked seriously at making a profit off of this blog, but kudos to those of you who can make it happen.

In fact, I’ve been writing this blog since 2006 and my sidebar earns me a whopping $40 a month if I’m lucky. (As someone pointed out I must own a very unpopular blog. That guy wasn’t wrong.)

This blogger told me his website earns $100,000 a year. That sounds super impressive, right? But don’t get too excited just yet. A minute or so later a few more details emerged. It turns out the website is run by four people. So run that math and this guy earns closer to $25,000; probably before taxes mind you. Yup, the numbers look a whole lot different when you divvy them up, don’t they?

Did the blogger lie to me? No. His website brings in $100,000 a year, (that part may be true), but at first glance it seemed like he earned that income all alone. Again the facts in isolation appear so much better than reality.

Monthly Expense Omissions

Here’s another great example. Have you ever had someone tell you they spend a ridiculously low amount to live in a high cost area.

By the way I give mad props to anyone who can do this. I lived in a group house with six people after college so I could afford to live in the city. It’s possible, but it’s certainly not easy. I recently met a few people who told me they spend less than $1,000 a month to live in Washington, DC. That’s crazy low!

After two or three questions I found out one person lives in his parent’s basement and the other has a live-in-boyfriend who earns a high salary and pays the majority of the bills.

Hmmm, those details don’t make the initial claim nearly as impressive, do they? We can create very interesting stories about ourselves by leaving out important facts.

Financial Independence Claims

How about those amazing stories of financial independence? I read so many of them. Incredible stories about people who save 25 times their annual expenses. Good for them. That’s amazing! But you know what? Before you try to follow in their footsteps you need to ask for more details.

A single guy living in Kansas might need $1500 to live comfortably each month. A family of four living on the East Coast might need $6000.

Has the guy from Kansas saved 25 times his expenses? Yes. Has he met the definition of financial independence? Sure. Has he lied? Most definitely not, but my own life circumstances couldn’t be any different from his. I might as well live on Earth while this guy lives on Mars.

Let’s be clear. I’m not diminishing his feat or saying the claims aren’t true. I simply think we need to review the details so we can understand the full picture.

It’s important to know how we are similar and how we differ, so we don’t step up to the plate and feel like a failure when we can’t meet the same FI goals.

Early Retirement Police

Oh this is a tough one.

You know those early retirement police? Yeah you do. The ones who say you can’t claim early retirement if you are still earning an income? Have you ever wondered why they make that claim? Because it feels like a lie to them.

I’m not saying it is a lie. I’m saying it feels like a lie to them. Their old-school definition doesn’t fit with the new way of thinking about optional retirement. So they literally read a post and think, “That’s BS. Stop claiming you are retired!” They feel they are being lied to.

You can agree or disagree with their sentiment. Personally I don’t think it matters if you enjoy another job after leaving your traditional one, but I can see why readers feel betrayed when they follow the rabbit hole of an article they feel mislead by.

Failing to Recognize Spousal Support

Or how about this one? Is it fair for a blogger to say I think we should all follow our passions if his wife is working in a job she hates? Should a blogger say we should work part time without acknowledging that his or her spouse works a full time job?

Is it fair to say we should move on to a more meaningful life, but fail to mention our partners are filling in the financial gap we left behind? We all know that both spouses can benefit when one leaves the workforce or cuts back on hours, but should we explicitly point out our ability to make those decisions because of our hard working partners? Partners that may not enjoy the same benefits of those who have left work behind?

My Own Half Truth

Why am I dredging up all of this stuff? Why does it seem like I’m pointing out so many lies and half-truths and even truths that are simply misinterpreted by the people that read our posts?

After all these years I’m not sure I’ve made my own story 100% clear. I haven’t purposefully left out any vital details, but I do think I’ve failed to highlight certain facts.

For example, I’ve written a lot about the money my husband and I saved prior to the time my children were born. I’ve also written about quitting my six figure job as a result of those savings.

It’s true that we were millionaires by the time I walked away from work, but it’s also true that I wouldn’t have quit my job if my husband wasn’t still employed. Have I made that clear to my readers? I’m not sure.

Am I leaving out a part of my story if I fail to discuss the importance of the money my husband currently earns? Yes, most definitely! My husband earns a six figure salary as a software engineer. That is an important part of our financial journey; perhaps one of the most important parts of all.

I recently discussed my thinking with a fellow blogger, Angela, from Tread Lightly Retire Early. She told me I was being too hard on myself. “I think your readers know that your husband earns a lot of money”, she said. But, honestly, I don’t know if they do. I don’t repeat the details in post after post. If you haven’t read my story from start to finish are you missing important details?

Have I presented this story as an amazing version of my accomplishments without providing enough kudos to my hardworking financial partner? After all I called this blog “One Frugal Girl” not “A Couple That Is Really Good With Money.”

Why Does It Matter?

Why does it matter? It matters because there are readers out there consuming our content. There are people on the street reading our stories and wondering if they can do the same things we do.

Amazing people are trying to replicate the stories we write about. Can they do it? Are we honest about how easy or hard it is to achieve the same goals?

Are we telling a half-truth, leaving out details or providing enough information for the rest of the world to see all of the facts.

If I inherit a million dollars I am a millionaire. If I go to college, get a high-paying job and save my money I can become a millionaire. But these two stories are very different.

Now what if my parents paid for my college expenses and I graduated debt free? Or what about the student who completes school with debt then pays it all off to become a millionaire? What about the high school dropout who builds a company from the bottom up and becomes a millionaire?

These are all different stories that can be spun in various ways. I am not trying to discount any of the hard work and effort that went into those journeys, but certainly some are more impressive than others. And keep in mind that all of those stories are impressive to the people who lived them.

The Stories We Tell

What’s my point in all of this? Well, without all of the facts some stories aren’t as interesting as one might lead you to believe.

As bloggers we need to be aware that readers look to our stories for inspiration and guidance. I owe it to myself and to those who stumble across the path of this blog, to tell the truth as openly and honestly as possible. I’m just not sure how to do that or if I already have.

We are not all starting from the same point, earning the same amount of money or saving the same proportion to build our wealth. I think it’s important to provide the facts to the best of our abilities and to hope that our readers ask questions of the details we provide.

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If you are interested in learning more about spotting lies check out this amazing talk by Pamela Meyer called “How to Spot a Liar.” It won’t help you on the Internet, but it provides valuable and disturbing insight into spotting lies in the real world.

Weekend Reading – Preparing for early retirement, best ETFs, how to dump your advisor and more #moneystuff - My Own Advisor

Saturday 2nd of November 2019

[…] I enjoyed this take by One Frugal Girl about money lies and financial dishonesty. […]

GLYPH-Rising

Wednesday 9th of October 2019

I have to admit the many individuals with successful blogs who claim to have realized FIRE and are "living off passive income", but, in fact, clearly live off their blog income, royalties, coaching fees, published articles, etc. and reinvest their dividends--do strike me as being somewhat disingenuous. Yes, they might say at times that they are still working in a sense, but draw a distinction by saying they are no longer "working for the man" but for themselves. Well, as someone who has mostly been self-employed by entire working career, I don't really get that distinction. If you are working hard, meeting deadlines, hosting meetings, under the pressure to publish, etc, that sounds like work to me, be it a W2, 1099 or any other form of compensation. My solution is to simply drop the "RE" and say you've achieved "FI" and define what you mean by that.

One Frugal Girl

Thursday 10th of October 2019

I think this is one of those cases where the word travels on a slippery slope. When we think about RE part of fire we think about not working. The new definition is quitting a conventional job in order to do 'other' work. But you raise an interesting point. If you are already working in an unconventional job and have been all along you are not retired. So how come one guy can say he's retired and the other can't? I think this is one of those cases where your view point alters the definition and I can definitely see how it feels like dishonest to you. Thank you so much for your comment. I have never thought about this issue from that point of view. I also agree that we should just use FI if you want to keep working and cut out the RE part.

Carol @ Downsize Your 2080

Sunday 6th of October 2019

Hi! I'll jump in with a comment since you happened to have my specific circumstance as one of your questions ("Should a blogger say we should work part time without acknowledging that his or her spouse works a full time job?").

I wanted to start a blog for years before I finally did, and in that time I read and reread all kinds of blogging advice. I identified my intended audience as married and degreed working moms who are conflicted about time at work because they want more time with their kids. I started my blog to write about having a part-time career as a great compromise in the quest to "have it all." I think it was Kassandra D. who wrote a post about doing no harm with our blogs. So, yes, I think I owe it to my audience to be clear that I have a husband who is the primary breadwinner and that is why I can afford to work less. This was especially true in our younger years when our cash flow was much tighter.

I also aim for one main point per post, and my biggest problem is that I am slow to write/publish and it's taking me too long to get my whole story out.

Carol @ Downsize Your 2080

Sunday 6th of October 2019

Quick follow-up: I HAVE been transparent about my husband. My last point was a reference to writing about the challenges of a part-time career. I haven't gotten to all of those yet!

Abigail @ipickuppennies

Saturday 5th of October 2019

This is why with every financial update I try to remind my readers that I have a high income and about the various financial advantages I have, like no kids (and the fact that I’ve jettisoned the spender husband). That makes a huge difference in results, even if you’re comparing me to a parent who makes the exact same amount that I do. Huge difference once you add in kid expenses. I also remind them that I have an incredibly low mortgage. All of these things are important because it’s natural to compare yourself to any results you read about and readers need to be reminded that situations vary greatly. And more importantly perhaps that I know this and am not saying the dreaded “if I can do it, you can too!” — ugh!

One Frugal Girl

Sunday 6th of October 2019

I think that’s an excellent point. A big part of this is the tone of what bloggers say and how they come across to readers. There is a lot of ‘this is easy’ I did it nonsense that fails to take into account the whole situation. Thanks for the comment.

BaldMoneyGuy

Wednesday 2nd of October 2019

Thank you for this post. Between the clickbait headlines and the need to appeal to a wide audience often times facts are conveniently omitted. Whether its disguising financial independence through frugality while earning high income, non-repeatable black swam type events, or having access to rare benefits such as a pension. I don't think one should apologize for their success but they should clearly address these advantages.

One Frugal Girl

Wednesday 2nd of October 2019

The way I see it we should all be immensely proud of our accomplishments. We begin the race at different starting lines but we all must work hard to reach the finish line. Some of us have to work even harder because we begin from farther back. This doesn't minimize the effort of any parties, but it does help us those who want to follow in our footsteps. They can see just how far they really have to go. Thanks for the comment!