In the wide world of personal finance, I can think of five specific things that people tend to procrastinate religiously. It’s like they’re taboo, except we’re always talking about how we should do them.
The reasons for this apparent laziness are many, but in my own life and those I encounter, a couple of common threads appear:
- We are afraid of financial projects that appear too large to handle or will take too long.
- We shy away from complicated situations, because it’s difficult to understand them on a top-down level.
- We put off things that seem to be too far into the future, thinking that we’ll “get to them later.”
- We don’t get to protecting things that seem like a remote possibility, like losing a job, getting injured, or worse.
I’ve been guilty of all of these at various points in my life. They are human nature, and they are hard to overcome.
The Big 5
The results of our procrastination are the most commonly put-off financial tasks. In my mind, the big five are:
- Budgeting. Real, solid budgeting.
- Investment management, like portfolio selections, re-balancing, etc.
- Home inventory. A list of all of our stuff.
- Insurance, which is a very broad field, but also very important.
- Income planning. Can you say retirement?
How are you doing with these five? Given them any thought lately?
I think people get away from budgeting for a number of reasons, but primarily because we’re either too afraid to face the truth, we feel like we don’t need one, or we simply don’t know how to get started.
Budgets are not a financial requirement, but they are critical for taking control of your money if you’re consistently spending more than you earn, or you don’t know where your money is going every month. You might also be in financial denial.
Ready to make a budget? Easy ways to start include beginning to track your daily spending and creating a list of priorities for yourself to gain focus and direction. See my series on budgeting for a complete overview!
I think most people tend to over-think or under-think their investments. When times are good, people are quick to jump on the latest opportunities, stock-pick, and otherwise meddle in their retirement savings. When times get bad, it’s over to index funds and walking away for months without a second look.
I think the right approach is somewhere in the middle. If you leave investments alone for too long, you’re neither optimized for growth, nor able to react to large-scale market trends, like good buying opportunities in broad sectors. If you follow the market daily, you’re bound to fall into the trap of simply gambling all your money.
Trying to prepare a complete home inventory seems like one of those big projects that could never be accomplished in one day, but that’s not necessarily the case. A home inventory is critical for many reasons, not the least of which are net worth and home insurance purposes.
Getting a well-formed inventory list together doesn’t have to be a trying process.
What’s the easiest way to get started? Try doing a “quick inventory” that only includes large items and fast estimates, rather than researched data. It’s much easier to go back and fill in the blanks later. Try walking around your house with pen and paper, rather than attempting a computer-only inventory!
Insurance (of all kinds) is a great example of an item that’s both “too far ahead” and “never gonna happen.” Well, let me ask you this–if it’s never going to happen, why bother buying insurance in the first place?
Of course, the answer is that we never plan for bad things to happen to us, but should be ready for them anyway. If your excuse is that it’s better to save than to insure, at least do so consciously, and not because you’re simply putting off evaluating your insurance coverage.
Ready to whip your insurance into shape? Set aside a week of your time to review all your insurance protection, and learn about the basic insurance products most people might need–including health, life, disability, car, and more.
Last, but certainly not least, is income planning. The most common form of this is retirement planning, but it easily extends to plans for periods of unemployment, disability, and even self-employment after leaving a steady job.
We don’t like to think that far ahead, because we’re not always sure what the future holds. That’s one of the reasons why substantial savings can be one of the best allies when it comes time to face uncertain periods of income.
How can be better plan for future income? Imagine what it would be like to live on 50% of what you make today. Think about your retirement lifestyle. Will you retire at all? How might your career change in the future and how will it impact what you make? Do you want to change careers?
Do it Today!
It’s so easy to fall into the habit of procrastinating these five, because they’re not constantly in your face and calling for attention. But importance of making time to think about them is clear–so make the time today and get started on the important, but not necessarily urgent, financial tasks.
Photo by auburnxc