9 signs you're lying to yourself about money

Why it's wrong: Having insurance is like carrying an umbrella — you may not need it, but you'll sure be glad you have it when the storm hits.

If your career is your largest asset, a temporary or permanent loss of income can affect you and your dependents greatly.

How to improve: Your employer may provide short-term disability insurance or life insurance at group rates, but if you support anyone — children, a spouse, or otherwise — and rely on a steady paycheck to pay regular bills or stay on track financially, you probably need additional disability insurance and/or life insurance.

Disability insurance can help replace lost wages if there's an accident or illness that keeps you from work for a period of time. Meanwhile, life insurance provides a chunk of cash to your beneficiaries if you die prematurely — and the younger and healthier you are, the cheaper it will be.

Why it's wrong: If you're not saving money automatically, you're at a major disadvantage compared to those who are. When you pay yourself first, there's little to no effort involved. Why not make it easier?

How to improve: If you're just kicking whatever cash you have left over at the end of the month into a savings account or retirement account, there's a better way. Set up automatic transfers, direct deposit, or make use of your employer-sponsored retirement plan to save pretax money.

If you're saving for short-term goals in an account earning less than 1% interest, you can do much better. Pick a high-yield savings account with no fees and high APY and watch your money grow.

Why it's wrong: The problem isn't buying the $4 latte. It's the belief that cutting out minor purchases, no matter how much we enjoy them, will be the ticket to wealth. But depriving yourself isn't the answer.

How to improve: As financial expert Ramit Sethi says, it's the "big wins" that make a world of difference. For example, negotiating a higher salary, automating your money, investing consistently, avoiding high-interest debt, and maintaining good credit. "If you can focus on the 5-10 Big Wins, rather than 50 little things, you can have an insurmountable edge in life," Sethi says.

Why it's wrong: If you don't have a healthy relationship with money on your own, you won't be able to fix it by adding a partner to the mix.

How to improve: Money should be a an ongoing conversation in every healthy relationship. Talk about your goals, your systems, your perceptions of money, your good (and bad) habits, and how you can work together effectively.

Why it's wrong: If you have no emergency fund, no retirement savings, and/or you have credit-card debt, there's still work to do.

How to improve: There are at least four things people who are good with money do every day: balance their needs and wants, make decisions that bring them closer to their goals, limit their exposure to temptation, and practice patience. These strategies lay the foundation for managing your money wisely.

Why it's wrong: Debt may feel ubiquitous in your social circle or wider society, but that doesn't mean it's healthy. In fact, high-interest debt is what holds so many people back from building wealth. When managed responsibly, mortgages and student loans probably won't derail your financial life, but credit-card debt certainly can.

How to improve: Avoid debt by paying off your credit-card balances in full, every month. If you already have debt, make a plan to pay it off as soon as possible. You'll see your credit score improve and be able to put the money you recoup to work.

Why it's wrong: Chances are you don't make the same amount of money as your friends, or have the same expenses or financial goals. Mindlessly throwing your credit card down at every happy hour and draining your savings account to go in on a summer house because that's what everyone else is doing isn't the way to wealth.

How to improve: Make a list of your own financial goals to help you figure out what's really important to you and only spend money on the things that bring you closer to achieving them. Now is the time to be discerning about how you spend your money. As Sethi puts it, "cut costs mercilessly on the things you don't care about."

Why it's wrong: While it's true that your money is at greater risk invested in the stock market than sitting in a cash, the biggest loss is not investing at all. You can't time the market to avoid loss and downturns — they're an inevitable part of the market cycle — but the longer you stay invested, the better you'll fare.

How to improve: Four financial planners told Business Insider that the best and easiest way to get started investing is through index funds, which you can find in your 401(k) or IRA retirement accounts or regular brokerage accounts.

Index funds are investments in a broad selection of stocks. Rather than choosing and buying individual stocks, an investor owns a small piece of every company or asset in the fund. They're low-cost and don't require active management, making them the ultimate "set and forget" investment.

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