Financial Procrastination: The Cost of Delayed Decisions

Financial procrastination is a perilous habit that delays today’s financial chores until tomorrow. If your tomorrow turns out to be days, weeks, or even months later, this decision could cost you. Before we examine how financial procrastination impacts your financial well-being, let’s define it. Understanding why and when this bad habit forms can help you avoid it.

What is Financial Procrastination

Financial procrastination is the act of postponing an important financial task until the very last second — even if there are consequences. 

Almost everyone procrastinates once in a while. After all, it’s next to impossible to be “on” all the time, organized and productive every waking minute of your day. 

It only becomes a problem when you are what psychologists call a chronic procrastinator

A chronic procrastinator always chooses to focus on menial, unimportant tasks when they should be dealing with financial responsibilities. As a chronic procrastinator, you may ignore the big things, like paying your bills on time. Other times, you might delay investment decisions that reduce how much you can save long-term.

People become chronic procrastinators for a variety of reasons, but it’s often tied to depression and anxiety. Poor mental health can make simple financial chores seem impossible, so you wind up saying, “I’ll handle it later.”

Where Financial Procrastination Hurts the Most

Spoiler alert — addressing your financial chores sooner is usually the smarter (and less expensive) move when it comes to these three tasks.

1. Paying Bills on Time 

Let’s say you wait to pay your utility bill until 11:58 pm the day before it’s due. Cutting it this fine doesn’t leave any room for errors, so when you mistype your login credentials, you waste time you don’t have to input the correct info. As you complete the captcha, the clock runs out, so you miss the cutoff and pay your bill late.

Paying bills late comes with a slew of consequences. First of all, you have to pay a late fee. Depending on how late you are, your outstanding bill may also start to accrue additional interest charges. An outstanding bill may even impact your credit score. 

2. Covering More Than the Minimum

Covering just the minimum payment on a line of credit or credit card is a classic procrastination pitfall. At first blush, it may seem like a great deal. Not only do you pay your bill on time, but you also pay less money than your full balance. Win-win, right? Well, only partially.

It’s true, your minimum prevents a delinquency on a line of credit, so you can neatly sidestep a late fine. However, you will pay more in other charges, as interest on your remaining balance adds up. 

That’s why the folks behind MoneyKey recommend you always pay your full line of credit balance whenever you can. Failing that, you should pay as much as you can. Paying more than the minimum will help you reduce your balance faster, and it releases your available credit limit for the next emergency. 

3. Filing Your Taxes

Taxes are tedious at best and stressful at worst. Naturally, plenty of people put off this financial chore — whether due to exhaustion, anxiety, or ignorance. Income tax is one of those things you’re expected to pick up on your own as an adult, so you might not know your rights or responsibilities.

Failing to file on time can lead to strict penalties and interest charges, not to mention unwanted attention from the IRS

The Takeaway:

Financial procrastination comes with financial consequences. Find out what’s stopping you from making prompt decisions to turn your finances around. Budget carefully, automate bills, and watch the calendar.  

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