Investing sooner means more time in the market, and thus more time for your money to grow. Compounding is the driving force behind portfolio growth and itís the reason why investing earlier can provide you with a bigger return.
Quite simply, the earlier you invest, the more opportunity for financial growth.
We all procrastinate and choosing some tasks over others is a normal part of human life. That is how we prioritize at home and at work.
The thing is, financial procrastination can cost you more than just a few late fees.
Here are three costs you might experience:
The opportunity cost:
Messy personal finances mean you may not have a handle on the coming and going of your money. This makes it very easy to overspend, run up credit card debt, and rack up late fees and penalties on everything. This means you can find yourself in financial trouble after not too long.
This is all before you even have a chance to save or invest in your future. There are dozens of ways to manage money strategically, but you cannot take advantage of them without getting organised first.
The time value of money:
When it comes to investing, time matters. Someone who begins to invest at 50 years old, will have to save more and get comfortable with higher risk to catch up to someone started putting money away at 25.
In your twenties or thirties, it's easy to think retirement is too far in the future to consider. In your forties and fifties, it seems like it might already be too late. Putting off planning for your later years could nasty consequences when it comes time to retire.
The health and relationship cost:
You may not have thought of it this way, but poor financial planning affects more than just your bank account. Your peace of mind and health are on the line, as well. Thinking about whether you can cover an unexpected car repair or an urgent need to replace your washing machine is not just emotionally difficult ó it can have consequences for your health.
Money worries can also put a strain on personal relationships and careers.
Some good advice to get yourself on a good financial path is to start small. Create a budget to track where your money is coming from and where it is going.
By the time you realise the true cost of your procrastination, it will be too late, you can never recover that money or time.
As with any endeavor, this isnít something that you have to do alone. You can get support from professionals who understand todayís market, are willing to help you design a process and a plan to help you reach your goals. They have the experience to think through financial decisions with you.
- This blog contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
- If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning Pty Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.