Financial procrastination is the mother of all investing evils. It is quite simply putting off until later what you should be doing now.
That might be filing tax returns, reviewing your investments, writing a budget, or simply getting out of your armchair and actually investing. If procrastinated over, all of these can cost you money directly or indirectly.
Time is an investor's ally, but procrastination is your enemy. This is simple to see when it comes to investment growth. Money multiplied by time equals growth. Cut the time factor, you end up with a smaller nest egg.
Even starting five years later on a savings plan is very costly. If, for example, you want to save $200,000 by retirement, a modest goal indeed, and your money is returning 6% and you're taxed at 33%, the actual amount you personally will have to put aside is $102,503, if you start at age 35. If you leave it five years later, you'll need to take $115,109 in real dollars from your own pocket. The rest comes from investment returns. Check it out yourself on the Save Now vs Save Later calculator on Calcxml.com. Even more interesting if you have time, is the How Much Will I Need To Save For Retirement. But don't click on these links if you're likely to waste valuable time.
Procrastination also has direct costs in fines and late payment charges. Every year, for example, 1/3rd of all IR3s aren't completed on time and the Inland Revenue Department dishes out fines ranging from $50 to $500. You'll also pay interest on any outstanding taxes.
Likewise procrastinating about paying bills leads to a loss of prompt payment discounts. You can wipe this right off your time wasting agenda by signing up for direct debit.
And how many people have held onto gift cards only to find that they've expired when we want to spend them?
Procrastinating is bad when it comes to the small stuff, but downright evil when it comes to big decisions. Just think of the first time home buyers who procrastinated between 2000 and 2003. Ouch. That cost them hugely.
People often don’t know why they procrastinate. Some typical reasons are:
- Negative self-talk or beliefs
- Being overwhelmed with the options
- Letting distractions rule
- Fear of failure or success or
- Not enough desire.
Whatever it is, procrastination isn't easy to solve. Check out these videos on YouTube for some procrastination beating tips.
But remember, the root cause may be buried deep in your subconscious mind and date back to childhood. If this is you, then you may need to get some professional help to retrain yourself.
And finally, if financial procrastination is the mother of investing evils, emotional attachments to your investments is the mother-in-law.