Are you a financial procrastinator?

Does this sound familiar? You know all the sensible financial things you should be doing: saving for a rainy day, not spending more than you earn, paying off your credit card debt and investing the rest.

It’s just you never seem to quite get round to it. It’s not that you don’t want to do it, rather it’s that other things keep getting in the way. Other things that seem to be much more important, or just more fun stop you from sorting your money. (Mind you, it doesn’t even have to be more important or more fun to get in the way. Even cleaning the house can look good in comparison to sorting your finances. )

All these reasons for not tackling your finances are a form of procrastination, and they lead to a situation that gets worse the more time you leave it to grow.

Procrastination creeps into all areas of our life. We put off dealing with relationship issues, work deadlines and our health. And you know that the longer you put things off, the messier they get, and the more impossible they seem to deal with.

What financial procrastinators say

If you have ever said any of these things then it is likely that you too are a financial procrastinator:

  • “I’ll do the bills later. (It will be fine if they are late.)”
  • “Things will get better when I get a raise.”
  • “I’ll just rely on the state when I’m older.”
  • “I don’t have a problem with overspending.”
  • “I’ll just pay the minimum on my credit card debt.”
  • “I don’t have any money left at the end of the month to save.”
  • “I’m doing OK by myself…I don’t need help.”
  • “At least I’m not as bad off as they are.”
  • “My situation is so bad I don’t even want to think about it.”
  • “Why do I keep running into these same problems over and over?”

 

Since it’s difficult to make money matters as fun or thrilling as the newest blockbuster, you have to learn to get past the procrastination and for that you may just need some shock treatment…

The shock treatment

Are you sitting comfortably? Then I’ll begin.

Time is by far the biggest component to building wealth. The more time you can be financially healthy – saving and investing – the more prosperous you can become. Every day you put off dealing with your finances is another day wasted in this pursuit. If you don’t believe that, then don’t listen to these powerful examples.

“Every day you put off dealing with your finances is another day wasted in this pursuit.”

A tale of two investors

Let’s consider two investors: Early Starter and Late Investor

  • From the age of 25, Early Starter is investing £2,000 per year in an ISA for 10 years until he is 35. At 35 he stops and never puts another penny into his fund again. He leaves his pot untouched for the next 30 years and at age 65 (having achieved an annual return of 8%) he now has £314,870 to play with.
  • Late Investor, meanwhile, spends the lot between the ages of 25 to 35. Only when he hits 35 does he start investing away £2,000 per year in his ISA. He keeps this up for the next 30 years until he reaches 65. He also benefits from an average annual return of 8% but instead ends up with £244,691.

 

To recap:

  • Early Starter has invested a total of £20,000 and has a pot of £314,870 when he reaches 65
  • Late Investor has invested a total of £60,000 and has a pot of £244,691 when he reaches 65

 

By starting early and letting the power of compound interest take hold Early Starter has 28% more than Late Investor – even though Early only invested a third of the amount.

The simple lesson for financial procrastinators

The lesson from this; Do it. Do it now! There’s no time like the present.

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Investment risk: Investment in the stock market is not a suitable place for short term money and you may not get back what you put in. All investment carries risk and it is important you understand this, if you are in any doubt about whether an investment is suitable for you, please contact us. Investment in the stock market and any income derived from it, may go down as well as up.

Wealth Horizon certainly lives up to its promise of making investment simple to understand

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