How Procrastination Affects Your Finances | My Money Sage

A recent study suggests that procrastination is the outcome of present-biased preferences. Have you ever noticed how children do chores if you promise to buy them chocolates? That’s how the human mind works. Unless there is instant gratification, doing work is not very appealing.


Instant gratification is more pleasing to most of us rather than waiting for something pleasant. That’s why we tend to postpone things. This affects our personal as well as financial habits. Unhealthy financial behavior includes delaying retirement savings, impulsive shopping, and not paying bills on time.

Research shows that procrastinators behave differently from non-procrastinators when it comes to important financial behavior related to retirement planning. Non-procrastinators are less likely to participate in saving plans, initiate saving later, and less likely to save a fixed sum every month.

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Today’s individuals, especially youngsters, have a present-bias preference. This refers to individuals impulsively diverting from a planned course of action and turning to something more pleasant instead. For example, a youngster wants to reduce credit card debt. However, when he goes out shopping with friends, he wants to splurge on eating out and movies. He thinks using a credit card will help him. So, here eating out seems to be more important than cutting down on credit card debt. This is the present-bias preference.

Millennials tend to postpone boring tasks like investing in mutual funds because they don’t think about how lesser savings might affect them in the future. Spending seems to be more pleasing than saving. This habit may affect your finances adversely. Want to know how this habit can affect your savings? Here are the details.

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Get Less

We all want to save as much money as possible. You can save a good amount for your retirement or for buying a house if you begin saving early. This is not possible if you procrastinate. The later you start saving, the lesser will be your savings. Let’s say you start saving Rs — 10,000 per month when you are 30 and stop saving when you turn 60. You will have Rs. 2.2 crore if you earn 10% on your savings. Does it seem like a reasonable amount? However, when you start saving Rs. 5,000 per month when you are 15 and stop saving when you are 30, you will have Rs. 3.6 crores by the time you retire at 60. So, the earlier you start investing, the more will be your savings. A delay of a few years can make a significant difference in how much money you have by retirement. So, the more you postpone savings, the lesser the money you’ll have.

Budget Problems

If you have the habit of drawing a monthly budget, you must track whether you are spending more than you earn. If you tend to procrastinate, then you might postpone cutting back on your spending. Until you reduce your spending, you will not be able to save. As mentioned earlier, the later you start saving, the lesser will be the amount you will save. You need to start reducing your spending right away. Draw a monthly budget and try to see the categories of expenses that you can do away with. The earlier you start budgeting your finances, the faster you can start saving.

Also read:Are you a victim of Financial Infidelity?

Increasing Debt

Does your credit card bill keep increasing every month? Then, you might have the habit of postponing things. If you pay your credit card bill in full every time, then, you will never be worried about increasing debt. It is common for people to pay just the minimum balance on their credit cards. They think they will pay the balance later but forget to pay the outstanding amount. They don’t realise that interest has been added to the balance and the balance goes up with every bill. So, procrastination will increase your debt. You should make a repayment plan for paying off your debt. Add that to your budget.

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Higher Taxes

Tax planning is a rushed activity for most salaried individuals. Last-minute tax planning could mean higher taxes. Many individuals pay lower taxes than they need to or use deductions that do not apply to them. This will lead to higher taxes and penalties.

It is best to finish investing in tax-saving investments at the start of the financial year in April. That will help you file taxes on time in July. You don’t need to file taxes at the beginning of the year, but you should at least give yourself time to file your return carefully.

Piling Bills

Procrastinators tend to postpone paying their bills. This includes utility bills and EMIs. Paying bills late will lead to you paying late fees and interest charges. So, you must keep your eye on the due date for each of your bills. You can note the dates, set a reminder in your phone or in Google calendar to ensure that you don’t miss paying those bills on time.

Missing your bill due dates will not only mean late fees and interest payments, but late payments will also affect your credit score. The lower your credit score, the less likely lenders will be to give you loans. So, pay your bills on time or set up auto-payment for the bills.

Also read: Financial Planning for the Self-employed

Job Woes

You look out for jobs, and you find a job that matches your profile and comes with a bigger salary. But you postpone applying to that job thinking that you will get a better job. If you keep waiting, that position might get filled, and you might have to make do with your present job and the same salary. This will affect your finances.

You need to understand that correcting your resume, applying for a job, and attending interviews are all tedious and time-consuming. But when if you stay put at your current gig, you will be underpaid and will think of how you should have applied for that job that matched your profile. So, don’t postpone applying for jobs.

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The habit of procrastination usually affects your finances indirectly. So, try and avoid postponing savings and investments to ensure that you have a good amount of money for your financial goals and retirement.

About the author

KishorKumar Balpalli, believes that financial literacy and discipline is the key to one’s financial freedom. KishorKumar is a Certified Financial Planner, Personal Finance Blogger & the Founder of an award-winning Wealth Management platform. myMoneySage simplifies investing for individuals and amplifies business growth for Registered Investment Advisers by leveraging Artificial intelligence and machine learning. The AI of the machine plus the intellect of the human advisor enables comprehensive & client-centric advice at a fraction of the cost of a conventional adviser. is an award winning personal finance platform. It helps you aggregate all your personal finance accounts like FD, Equity, Mutual Funds, PPF EPF, NPS including, Credit Cards & Loans etc. It's one place where you can track, plan and invest seamlessly. empowers you to invest in zero commission direct plans of mutual funds thereby helping you generate higher on investments. The best part is it comes with a lifetime Free plan.

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