Do you procrastinate? Let’s put it this way – if you’re a human being like me, you probably procrastinate. We all do it from time to time, some of us more often than others. Sometimes it doesn’t do much harm to put things off for another day. However on other occasions it can do a lot of damage – and this applies just as much to your finances as it does with many other areas of your life.
Its effects on compound interest
If you remember a couple of weeks ago I created a post about compound interest. You can click through the link to read more about it if you wish, but the main concern here is that the power of compound interest will be greatly affected if you start procrastinating about your savings.
If you plan to save, say, $100 a month every month for ten years, you’ll have $12,000 by the end of that period of time. However you’ll also have additional cash that has built up through the interest that has been added over the years.
Now if you start by saving money each month but then put off continuing with it for a while, you’ll have a lot less to show for your efforts by the time you get to the end of the ten year period (or however long you’re saving for).
Its effects on your security
Everyone would like to have financial security throughout their lives. However, unless you happen to get lucky and win the lottery, you’re likely to have to invest for it instead.
Again, if you procrastinate and you put off looking for the right investments to suit your needs, you’ll end up saving a lot less over time. This also means you’ll have proportionately less security to fall back on as you get older.
It could even lead you to exercise kneejerk reactions
Who knew procrastination could be so dangerous? This is probably the worst part about putting off your investment decisions. There is bound to come a day when you realize you haven’t yet acted to protect your financial future. When this happens you might end up acting faster than you should. You may cast around for ideas and potential investments, diving into one or more of them without due care and attention. If this occurs you could end up losing money rather than saving it.
As you can see if you turn the occasional bout of procrastination into a serious habit you could be heading for financial trouble. Always make sure you can get the best habits in place now and try not to procrastinate over anything if you can help it. This will improve your life in lots of different ways, both in terms of cementing good habits into daily life and in terms of developing a nest egg for the future you can hopefully rely on. If you know you have a tendency to procrastinate, perhaps now is the time to make changes.