Why waiting until "Later" can ruin your life
Updated: May 7, 2020
The idea of “doing it later” accumulates mental debris.
The temptation of procrastination, if indulged, leads to a backlog of clutter that too often goes unaddressed.
And whether it’s procrastination around clearing the clutter in your house, your computer, your finances, or your psyche… so often “later” turns into “never”.
And when it comes to finances, procrastination is one of the most dangerous things that can happen to anyone.
So many who procrastinate on planning find themselves in serious trouble (unexpected medical expenses, family emergencies, etc), with no options or support because simple preparation was avoided beforehand.
The truth is that “I’ll do it later” is the attitude that most Americans adopt when it comes to their financial planning. And the truth is, waiting hurts you. There is a direct correlation between waiting to address financial planning and financial pain.
Here are 4 realities that come along with poor or no financial planning.
Simply put, the longer one waits to plan for retirement, the longer they’ll need to wait to retire. Even when retirement is timely, poor planning can still result in insufficient income that necessitates a return to work at an elderly age. This does not include becoming a potential burden onto your parents or children financially or physically. Healthcare and long-term care costs are extremely high and need to be taken into consideration as well because that can eat a large chunk of your retirement. Also, retirement is increasingly becoming more difficult to execute due to decreasing social security, inflation, people living longer, and the rising costs of healthcare.
Life and Disability insurance become more expensive the longer one waits to start a policy. A life insurance rate could be as low $30 if engaged at age 25, but $200 if engaged at 45. (Disclaimer: these prices are just examples of general estimations, not exact quotes). Furthermore, our health is something we cannot predict, and health issues make insurance policies very difficult to obtain.
Even those who are single should get this as soon as possible, as we never know what will happen in our future and should be prepared beforehand. (Personally, I have written 4 death claims in 4 years, all people under 40 years old. None of these folks or their families expected that they would pass so early.)
3) Budgeting, Spending, Saving:
Smart budgeting is crucial to financial success and to accruing wealth. When you wait to employ an effective budget for finances, in a nutshell you leak money unnecessarily for longer. Waiting to budget means spending unnecessarily for a longer period - hemorrhaging money that could instead be serving you in savings.
The longer the wait to pay it off, the more interest builds over time. This can work in tandem with inefficient budgeting and unexpected emergencies to do serious financial harm. This does not mean we throw all of our excess money into paying debts off, but coming up with a plan is critical. Smart management of debt is important. For example, if we throw all of our money to debt and don’t save (keeping an emergency fund, etc.) we will lose all of our flexibility and financial security that comes along with having cash available on-hand.
I’ve seen the above things happen to people around me time and again.
It isn’t fun for anyone to have to start working again 10 years after retiring because they didn’t have enough money in their 401K. And be assured, the money your employer is putting away isn’t going to be enough.
This very thing happened to my parents, now in their 70s and going back to work because their retirement fund was simply not enough. This would not have been the case if they had planned early.
I’ve also witnessed people who were once in perfect physical health, who then face a medical emergency that brought them to financial ruin because they had no system in place to support themselves in the case of an emergency.
Of course, not everyone is going to face a medical tragedy. But even in the most mundane sense, failing to plan puts you and your family at risk. And the longer you wait, the greater and more expensive the risk becomes.
So the most important thing you can do is to take action as soon as possible. Once you have a solid plan you will be one step ahead; if not you will always be behind.
Take good care of yourself, and your financial health.