Procrastination is a bothersome habit when it comes to performing personal errands or professional work, but it is especially damaging when it is related to financial decision-making. Putting off financial decisions can not only lead to leaks and losses but also impact the financial lives of those who are close to you.
There are many serious issues that
can come up like:
(i) If you do not start investing
on time, you may run short of funds for your own/children's goals;
(ii) if you do not invest in the
right instrument, you will pay in terms of the lost opportunity;
(iii) if you do not pay your
premiums or EMIs, you will be saddled with penalties and lapsed policies.
As we can see the dangers of
financial procrastination are immense and long-lasting. However, it is a peril
that many investors live with, knowingly or otherwise. The good thing is that you
can avoid it if you know why you are doing it and find the solution for the
same.
Procrastination is a behavioural
issue and one way to fight financial procrastination is to understand the
reasons for it and find a proper solution for the same. Let’s understand the
main reasons for it and how each of these translates to financial
procrastination.
1. Fear of failure:
A common reason for not investing
on time is the anxiety about losing money if put in an unsafe or wrong
instrument. Highly risk-averse people prefer to put off decisions rather than
start putting their money to work.
2. Tedium or laziness:
A simple reason for putting off
payments of bills, premiums or EMIs is that people find it too tedious and
boring to perform these tasks. So they take refuge in laziness and do nothing
instead.
3. Ignorance:
Most decisions regarding
investment are put off simply because people do not know where to invest or how
to identify the right instruments. They even dither about finding the experts
they can consult regarding the same because either they are introverts or they
don't know whom to approach.
4. Too many options/
decisions:
Most financial decisions are
delayed because there are too many decisions to make, like: which health
insurance to buy, which mutual funds to invest in, how to file tax returns, how
to save tax, how to save for a vacation. There also are too many options
available in the market, be it for mutual funds or health insurance plans, that
it becomes difficult to choose. So, these people become overwhelmed, go into financial
paralysis, and simply do nothing.
5. People think they have
time:
Most investors keep putting off
saving or planning because they think they are too young and have enough time
to do so later on. They miss out on the magic of compounding and often fall
short of their goals, be it for their retirement or children's weddings.
6. Unstable job or
relationship:investments
An uncertain situation in life,
be it a job or relationship, can make people procrastinate because they keep
waiting for things to settle down or improve. If people think they are going to
lose their job, they will not invest in mutual fund SIPs or take a home loan
where regular payments are required. Similarly, an uncertain future with a
spouse makes people put off joint investments.
How to solve this issue
Although procrastination could
be sometimes due to habit and sometimes it could be a genuine also, however, it
can still be managed. A good way to deal with most such reasons is first to
identify the real reason behind the procrastination and then to take the help
of a financial expert, or even a therapist if the problem is severe. To deal
with tedium, automate your payments. Once you have identified the reason,
finding a solution will be easier.
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