I saw a sign in a sandwich shop recently that said, “Honesty is not only right, it’s efficient.” When you’re anything but honest, it takes energy to come up with a new story and maintain that story over time. There’s no doubt that being honest is the easiest and right thing to do. But a commitment to honesty is also a good financial move. Here are 6 people you can’t afford to NOT be honest with.
Be honest with…
- Your Insurers: Your house and your income stream  are most likely your two most valuable assets. So it stands to reason that your home insurance and life  and/or disability insurance  are your most important insurance policies. But if you lie to your insurers, they can cancel your policy or deny your claims just when you need them most. So be honest when filling out insurance paperwork. Telling the truth might cost you a few more dollars in premiums, but it will be worth it in the end. It would be terrible for your family to file a life insurance claim and be denied a payout in the midst of their grief. Make a commitment to tell the whole truth when filling out insurance applications, and revisit the applications every five years or so to make sure they remain accurate.
- Your Employer: As stated above, your income stream is one of your most valuable assets . And since lying to your employer is grounds for termination, it’s probably better not to do so! You should be 100% honest in every interview , telling the truth about skills and experience and divulging up front anything that could get you in trouble later – this includes a criminal history, past employer grievances, other jobs, potential conflicts of interest, etc. If you do something wrong at work, own up to your mistake – don’t try to lie to get out of it. Be honest about your current salary when starting a new job  and be reasonable about what you can command in a new position. Honesty is hard, especially when a seemingly harmless fudging of the truth could help you land a larger starting salary or end your membership among the ranks of the unemployed . But if you get caught later, you could find yourself unemployed AND labeled as dishonest, making it harder to find another job.
- The Government: Like it or not, the government has the potential to have a big impact on your financial life. If you lie on your taxes , you can face penalties  of up to .5% of the unpaid taxes each month you fail to pay, not to mention jail time – and if the fraud is intentional, there is no statute of limitations. You can also end up in big-time financial trouble if you lie to the government in other areas – unemployment fraud, Medicare fraud and Social Security  fraud are serious crimes with serious implications. In addition to owing penalties for the benefits you didn’t deserve, you may also lose out on benefits  that are rightfully yours. So pay what you owe, use what you earn and pledge 100% honesty when it come to your government dealings.
- Your Financial Planner: A financial planner  can help you get out of debt , invest wisely, optimize your taxes  and protect against loss. But a planner is only as good as the information he or she is working with. If you understate your debts, overstate your assets or otherwise fudge vital information, your “personalized” plan may actually work against you. A financial planner is bound to confidentiality and no matter how bad your situation is has likely seen worse. A doctor needs a full medical history (no matter how embarassing) to diagnose a treat a health problem. Likewise, a financial planner needs the good, bad and ugly to devise a plan that works for you.
- Your Spouse: If you’re married , it is vital that your spouse know all there is to know about your financial life, regardless of who earns the most money or takes care of day-to-day financial decisions. If you tend to serve as the family CFO, help protect your spouse by sharing information on income, assets and major bills with him or her. If your spouse tends to handle family money matters, make a date to sit down and avail yourself of the information; you are responsible for it . You must protect yourself in case of your spouse’s sudden disability or death – without knowledge of your assets and liabilities you will be even more overwhelmed at an already-distressing time. It is vital that you and your spouse trust each other when it comes to financial issues. And if you don’t trust your spouse when it comes to non-financial matters, there’s even more reason to make sure you know where you both stand financially, so that you can protect yourself in case of divorce – a financially and emotionally draining experience and one with potential long-term financial implications  for either spouse. If you’re not married, you should have someone you can trust at least basic information to in case of your unexpected incapacitation or death. Consider creating an “In case of emergency ” document with all of your account numbers and online log-ins to help your next-of-kin access your assets if necessary.
- Yourself: While this last one may not be as concrete as some of the others, it is vital that you are honest with yourself. Being honest with yourself about your current financial state will help you improve that state if necessary. Until you are ready to face the numbers when it comes to debt and truly assess and reign in your spending, you will not be able to successfully get out of debt. Being honest with yourself in other matters can have a financial impact as well – if you feel that you could have a health problem but are afraid to visit the doctor and face reality, a belated diagnosis could cost you much more in the long run. If you know you are not cutting it at work but are afraid to have an honest conversation with your boss about how to improve, you could end up burying your head right up to the point of a layoff. Whatever the situation, be honest with yourself about where things in your life stand – your wallet will thank you later.