The Lie You Tell Yourself About Money (And How It's Keeping You Poor)

 

You've Already Given Up. That's Why You Don't Save.

You know you should save.

You feel the knot in your stomach when you check your bank account. You lie awake at night, doing the math in your head. If only I made more money, you think, then I could save.

That’s the lie. And it’s killing your future.

Let's get this out of the way, right now: Your savings account is empty because you've surrendered.

You think it's about your income, right? You tell yourself: “If I just made more money, I’d finally start building wealth.”

That's a lie. It's a cheap excuse.

You know people—maybe you even work with them—who make less than you, yet they’re the ones who bought a house, paid off their debt, or have a six-figure retirement portfolio.

How?

They haven’t found some secret stock or cracked a crypto code. They simply haven't convinced themselves that life is a game of chance they can’t win.

The real reason you don’t save, the single, terrifying truth that keeps you financially stagnant, is this: You are a fatalist.

You believe the events of your life are fixed in advance. You think you're powerless to change them.

This isn't just about money. This is the "throwing in the towel" effect that economist Stephen Wu exposed in his 2005 paper, Fatalistic Tendencies: An Explanation of Why People Don't Save.

You don’t save because, deep down, you believe your actions today won't change your tomorrow.

You’re playing a losing hand, and you’ve accepted defeat before the cards were even dealt.

 

1. The Ghost in Your Wallet: Meet Your Fatalism

Fatalism. It sounds like an ancient philosophy. Something for dusty old books.

It’s not. It’s the silent partner in all your financial decisions.

The dictionary defines it as “a doctrine that events are fixed in advance so that human beings are powerless to change them.” In the context of money, it’s the deep-seated, often unspoken belief that your financial future is already written. That your actions today—scrimping, saving, investing—don’t really matter.

You think it’s all up to luck.

Got a windfall? “I’m just lucky.”

Got a huge bill? “That’s just my luck.”

The market crashed? “I knew I shouldn’t have bothered.”

Sound familiar? This is what Wu calls “throwing in the towel.” You’re the boxer who’s decided he’s going to lose, so why even bother throwing a punch?

Imagine two people planting an apple tree. The Consequentialist and the Fatalist.

The Consequentialist plants the tree, waters it, and prunes it. He believes his effort will yield fruit. He is saving.

On the other hand, the Fatalist looks at the seed and says, “What’s the point? It might not rain. The soil might be bad. A storm could knock it down.” He doesn't plant the seed. He spends it. He is not saving.

Both want apples. Only one believes their actions can create them.

You need to see the numbers. You need the evidence that this psychological virus is real.

Wu’s research, using data from the Federal Reserve’s Survey of Consumer Finances (SCF), found a direct link. People who strongly believed that "luck" was the main factor in their financial lives were far less likely to save. This wasn't just about being poor. He didn't just look at poor people. He controlled for income and wealth levels. And the results held firm.

This was a mindset. A disease of the will. It's not your bank balance. It’s your belief system that’s broken.

Note this: Before we talk about your budget, we have to talk about your beliefs. Your bank account is a physical manifestation of your mental state. And right now, yours is infected with fatalism.

 

2. The Two Faces of Financial Surrender: Naïve vs. Sophisticated

Fatalism isn't one-size-fits-all. Wu’s research identifies two distinct types. Which one are you?

In the SCF, Wu isolated people who felt luck—either good or bad—played a significantly important role in their current financial status. This group is what he calls the Naïve Fatalists.

These are the people who attribute their position to idiosyncratic luck, not the fruit of their labour or planning.

This fatalistic group had a greater desired need for savings. They knew they should save. They claimed they needed 50% more in buffer stock savings than non-fatalists, all things being equal.

But they had a significantly greater shortfall in actual savings—a gap of approximately 30% relative to their target amount.

They preach saving, but they fail to save. They believe they should have an emergency fund, but they never build one.

You know the truth, but you can’t act on it. You are unaware of your own fatalism. You're lying to yourself and your future.

Picture Mark, 42, who earns $85,000 a year. He’s got a good job. He’s not stupid. If you ask him, he’ll tell you saving is important. “Oh, absolutely,” he says. “You gotta have a nest egg for emergencies. At least six months of expenses.” He can even tell you the exact amount he should have in the bank: $25,000.

But alas, he only has $1,200!

What happened? Mark is a Naïve Fatalist. He intellectually understands the need to save. But he doesn't act on it. Why?

Because deep down, he doesn't believe his actions connect to his outcomes. He believes his financial life is a series of random events. A car repair, a medical bill, a lucky bonus, a bad vacation—it’s all just luck. So, he lives paycheck to paycheck, convinced that one day, his "big break" will solve everything. He’s naïve to his own self-sabotage.

 

On the contrary, imagine Elena, 55, earns $200,000 a year. She is wealthy by any standard. She is also brilliant and self-aware. If you ask her about saving, she’ll shrug. “What’s the point?” she’ll say. “The system is rigged. The market is a casino. You can do everything right and still get cancer and lose it all. I’d rather enjoy my money now.”

Elena is a “Sophisticated Fatalist”. She is fully conscious of her beliefs. She doesn’t pretend saving matters. She openly states that she has no real control. She has thrown in the towel with her eyes wide open.

Using the World Values Survey (WVS), Wu found that people who rated low on a scale of “how much freedom of choice and control you feel you have over your life” were significantly less likely to have saved any money in the past year. This was true across 80 countries, from the richest to the poorest.

The Brutal Truth is: It doesn’t matter if you’re Mark or Elena. The outcome is the same. Financial servitude. One is asleep at the wheel. The other is driving the car off a cliff on purpose. Both are heading for the same crash.

 

Table: The Two Faces of Financial Fatalism

 

Feature	The Naïve Fatalist	The Sophisticated Fatalist
Core Belief	Unconsciously believes actions don't affect outcomes.	Consciously believes actions don't affect outcomes.
What They Say	“I really should start saving soon.”	“Saving is a sucker’s game. You can’t win.”
Self-Awareness	Low. Doesn't see the disconnect.	High. Fully aware of their pessimism.
Data Source	U.S. Survey of Consumer Finances (SCF)	World Values Survey (WVS)
Wu’s Finding	Knows they need more savings but has a major shortfall.	Directly admits low life control and doesn't save.

 

3. It’s Not Laziness. It’s a Learned Helplessness.

Stop blaming your willpower. This is deeper.

Psychologists have a term for this. They called it, ‘Learned Helplessness’. In experiments, dogs that were repeatedly subjected to mild, inescapable shocks eventually stopped trying to escape, even when a door was left open. They learned that their actions were futile.

That’s you with money.

Maybe you grew up watching your parents struggle. Maybe you got laid off despite being a top performer. Maybe you got hit with one unexpected bill after another. Your brain learned a lesson: “It doesn’t matter what I do. The outcome is out of my hands.”

Your fatalism is a psychological scar. It’s a defence mechanism against the pain of disappointment.

Wu’s research controlled for this. He looked at people who had recently experienced negative financial shocks. The fatalism effect still held strong. It wasn’t just the shock itself; it was the mindset the shock created. It was the story they told themselves about the shock.

Your financial life is a sailboat. The Consequentialist believes that by adjusting the sails (their actions), they can navigate the winds (luck, the economy) to reach their destination.

The Fatalist drops the sails, sits down, and says, “The wind will take me where it takes me. Why bother?” They are at the mercy of every storm and every calm.

Which boat are you in?

 

4. The Lie of "More Money": Why the Rich Are Broke, Too

“If I just made more money, all my problems would be solved.”

This is the siren song of the fatalist. It’s a fantasy that lets you off the hook today. Wu’s research annihilates this excuse.

He didn’t just study low-income households. He split the data. He looked at the top half of the wealth distribution. The results were the same. The wealthy fatalist was just as likely to have a savings shortfall as the poor fatalist.

Let that sink in.

The doctor earning $300,000 who believes “it’s all a gamble” is living paycheck-to-paycheck, buried under a mountain of lifestyle debt. The entrepreneur who sold her business for millions and believes “I just got lucky” will blow through it all in a decade.

Income is a number. Saving is a behaviour. Your behaviour is dictated by your psychology. Until you fix the engine, a bigger gas tank won't get you farther. It’ll just leak faster.

 

5. The Psychological Fuel: Why You "Throw in the Towel"

This psychological "throwing in the towel" doesn't start with your bank account. It starts with how you process negative events.

The Counterfactual Trap: "What Might Have Been"

In psychology, this is called counterfactual thinking—the “what might have been” mode.

Normally, this thinking is productive. You fail a test, and you think: “If I had studied three hours more, I would have passed.” This "upward counterfactual comparison" illuminates a path to future success (Roese, 1997). You learn, and you work harder next time. You gain control.

But what happens when you believe the negative event was unpreventable? If you believe your car crash, your job loss, or your market-timing failure was fate, you internalize the belief that you were powerless to stop it.

McClure, Allen, and Walkey (2001) showed people are less likely to prepare for earthquakes if they believe their preparedness will not have a meaningful effect on the damages. Why buy insurance if the damages are already fixed by destiny?

This fatalistic thinking generalizes. Your belief that you couldn't control the market crash translates directly into: “Why bother saving? I’ll just lose it anyway.”

Your brain needs to believe that a threat is controllable for your behaviour to change (Norris et al., 1999). You have to truly believe that saving $500/month can and will prevent your future poverty.

If you don't believe it, you won't do it. Simple.

 

6. Your Four Pillars of Fatalistic Failure

Fatalism manifests as a failure in specific areas of life. To fix your savings, you must fix your mindset in these four core domains.

The Health Failure

Fatalism kills you slowly, both literally and financially.

In the medical literature, people who are most at risk for certain diseases are often the least likely to get preventive screenings (Kash and Dabney 2001). They think: "If I'm going to get cancer, I'm going to get cancer. A checkup won't change my destiny.

They are the people who refuse to look at their debt, refuse to sign up for a pension scheme, and refuse to budget. They’re avoiding the "financial checkup" because they've already decided the diagnosis is terminal.

The Career Failure: Joblessness & Effort

Fatalism crushes your drive and your perceived value in the workforce. Petterson (1999) found that fatalism has a positive effect on subsequent joblessness, especially for poorer and disadvantaged workers. Why?

If you believe your effort won't determine your promotion, or that you’re destined to be fired, you stop trying. You become the athlete who "throws in the towel" when faced with a small deficit.

This also have a financial Parallel. You stop investing in your skills. You avoid asking for the raise. You choose the "safe job with no risk" because you believe the risk/reward is determined by fate, not your mastery. This low-effort approach caps your income, reinforcing the lie that you can't save.

The Cognitive Failure: Aging and Planning

Fatalism literally makes you dumber, slower, and less prepared for old age.

Caplan and Schooler (2003) showed that greater fatalism measured in one year predicted greater difficulty in everyday cognitive tasks twenty years later.

Why would you bother to plan for retirement if you believe your actions today have no bearing on your life 20 years from now? You don't update your expectations. You don't calculate rules of thumb. The cost of thinking is too high when the reward is zero.

You are rationally choosing not to plan. The complex math of optimal savings is "absurdly large" (Allen and Carroll 2001) for you. You believe you have no control, therefore you conclude the cost of planning is a waste of time. You let inertia—the default option—determine your fate.

The Political Failure: Civic Disengagement

Fatalism disconnects you from the collective power you possess.

Goodwin and Allen (2000) found strong relationships among fatalism, attitudes toward democracy, and democratic participation. If you believe your vote or your civic involvement won't change the course of the nation, you disengage.

It’s the same with your finances. You stop engaging with the system that creates your wealth. You don't learn about tax-advantaged accounts. You don't understand the benefits of the savings and investment. You leave free money on the table because you believe the game is rigged against you, so why bother learning the rules?

 

7. How to Perform Financial Surgery: Cutting Out the Cancer of Fatalism

Knowing the problem is half the battle. The other half is a brutal, unflinching war against your own mind. Here is your plan of attack.

Step 1: Confess Your Heresy

You must first admit you are a fatalist. Say it out loud. “I have been acting as if my financial future is out of my hands.” This is not an admission of failure. It is a declaration of war. You cannot fight an enemy you refuse to see.

Step 2: Hunt for the Evidence (And Burn It)

Your brain is a lawyer, not a scientist. It looks for evidence to support its pre-existing beliefs. Your belief is "I have no control." So, you collect all the "bad luck" receipts—the flat tires, the medical bills—and file them away as proof.

It’s time to cross-examine this crooked lawyer.

Create an "Agency Log": For the next 30 days, every single day, you will write down one specific action you took that improved your financial position, no matter how small. For example: "I packed a lunch instead of buying it. Saved $12."; "I cancelled a $8.99 subscription I never use."; "I transferred $50 to my savings account automatically."; "I read one chapter of a personal finance book."

This is not about the money. It’s about the narrative. You are gathering irrefutable evidence that your actions matter.

Step 3: Redefine "Luck”

Luck does not exist in vacuum. It needs enablers. It needs amplifiers. It needs dampeners.

Hard work and preparation catalyse and amplify good luck and dampen bad luck.

If you have $10,000 in savings and your car breaks down, that’s an inconvenience. But if you have $100 in savings and your car breaks down, that’s a catastrophe.

The car breaking down is the same "bad luck" event. Your preparation—your action—determined the outcome. Your savings account is a shield against misfortune. Stop seeing luck as your master. Start seeing it as a variable that you can prepare for and control.

Step 4: Engineer Tiny, Unbreakable Wins

You don’t build a savings habit by trying to save $1,000 a month on day one. You will fail. You will confirm your fatalism.

You build it by winning, every single day. Open a new savings account right now. Today, set up an automatic transfer of $1. That’s it. One dollar. Every single day.

It seems pointless. That’s the point. It’s so small that it’s impossible to fail. But every day you see that transaction go through, you are sending a signal to your brain: "I am in control. My actions have consequences. I am a saver."

After 30 days of flawless victory, increase it to $2. Then $5. You are not building wealth yet. You are building the identity of someone who builds wealth.

 

Conclusion: The Choice is Yours. It Always Was.

Stephen Wu’s research ends with a powerful policy suggestion. To increase saving, we must do more than provide information. We must change beliefs. We must show people that "small actions today can greatly affect the future."

That is your mission. Not as a reader, but as a human being destined for more than a life of financial anxiety.

The data is clear. The science is settled. The reason you don’t save has nothing to do with your income and everything to do with a story you’ve been telling yourself. A story that you are powerless.

It’s a lie.

You are not a leaf in the wind. You are the captain of a ship. The storms will come. The winds will change. That is not under your control. But whether you drop the sails or fight like hell to steer your vessel—that is 100% your choice.

Your future is not written by luck. It is written by the small, consistent, courageous actions you take today. Right now.