Column, Money Matters

The cost of procrastination

Some of us share a common experience. You’re driving along when a police officer pulls up behind you with lights flashing. You pull over, the officer gets out, and your heart drops.

“Are you aware the registration on your car has expired?”

You’ve experienced one of the costs of procrastination. Procrastination can cause missed deadlines, missed opportunities, and just plain missing out.

Procrastination is avoiding a task that needs to be done—postponing until tomorrow what could be done today. Procrastinators can sabotage themselves. They often put obstacles in their own path. They may choose paths that hurt their performance.

Though Mark Twain famously wrote, “Never put off until tomorrow what you can do the day after tomorrow.” We know that procrastination can be detrimental, both in our personal and professional lives. Problems with procrastination in the business world have led to a sizable industry in books, articles, workshops, videos, and other products created to deal with the issue. There are a number of theories about why people procrastinate, but whatever the psychology behind it, procrastination potentially may cost money—particularly when investments and financial decisions are put off.

Putting off investing may put off potential returns Let’s look at the case of Sally and Billy, who each invest $100,000.

Billy immediately begins depositing $10,000 a year in an account that earns a 6% rate of return. Then, after 10 years, he stops making deposits. Then 20 years later, the total value of his investment equals $236,000.

Sally waits 10 years before getting started. She then starts to invest $10,000 a year for 10 years into an account that also earns a 6% rate of return. At the end of the same 20-year period, the total value of her investment equals only $131,000.

Sally and Billy have both invested the same $100,000. However, Biily’s balance is higher at the end of 20 years because his account has more time for the investment returns to compound.

If you have been meaning to get around to addressing some part of your financial future, maybe it’s time to develop a strategy. Don’t let procrastination keep you from pursuing your financial goals.

Kevin Theissen, HWC Financial, kevin@hwcfinancial.com.

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