You’ve been good friends with procrastination for a long time (even since your days of pulling all-nighters in Grade 10 English). That’s why even all these years later, it’s easy to put off making key financial decisions. After all, there’s always tomorrow.
But the thing is that unlike when you procrastinate on booking your next vacation, there are times when putting off a financial decision can seriously cost you.
Here are 5 important financial decisions you should never delay:
1. Contributing to your retirement savings accounts
Can’t wait to stop bolting out of bed at the crack of dawn, sitting in horrendous traffic every morning, and dealing with irritating office politics? Well, here’s the thing: the longer you wait to start saving for retirement, the longer you’ll have to wait to retire. Period.
At this point in your life, retiring at age 60 vs. 65 may not seem like the biggest difference in the world. After all, it’s only 5 years, right? But trust us: when you turn 60, this difference will seem huge.
Keep in mind that it isn’t just your savings that you might be missing out on. In many workplaces, employers match a portion of your retirement savings contributions. If you’re lucky, this can be as high as 6% of your salary. So if you make $100,000/year, you could be missing out on $6,000 every year from your employer. That’s no small amount.
And remember that when you have savings, you make interest or investment income on the money. Because this income compounds year over year, it doesn’t take long before those savings start to snowball and you’re making interest on your interest. (It’s about time that your money started working for you!)
If you’re holding off on contributing to retirement savings, you could be leaving lots of money on the table in many different ways. That’s why it pays to start saving today. Your 60-year-old self will thank you for it.
2. Getting life insurance
Life insurance rates rise as you age. If you need it, buying early means paying cheaper premiums.
But taking advantage of cheaper premiums isn’t the only reason we recommend getting your life insurance sooner rather than later if you have dependents who rely on your income. The thing is that every day that you don’t have protection, you run the risk of getting sick. And any health conditions you develop later in life, like high blood pressure or sleep apnea, will only lead to much higher rates.
So putting off this purchase could be an expensive mistake.
Are you delaying a life insurance purchase because you don’t know how much coverage you should buy? We can help with that. Complete our free life insurance checkup to figure out how much life insurance you need to protect the ones you love.
3. Building your credit
You may not be house hunting today. (Have you seen the price tags on homes lately?)
But one day, you’ll probably want to make a purchase that requires you to borrow from a bank. Maybe it isn’t a home, but it could be a car or something else.
The catch-22 is that if you want to get credit, you need to show that you have good credit. So even if you don’t have plans to make a big purchase anytime soon, start building up your credit now. Get a few credit cards or open a line of credit and pay off those bills on time (more about that next). This way, you’ll be able to get the help you need when you’re ready to take the plunge.
4. Paying off credit cards
The annual percentage rates (APRs) for credit cards can be as high as 15% to 17%. This means that if you’re used to making only the minimum monthly payment, you can rack up a whole lot of interest. Aside from putting even more money into the pockets of your credit card company, you’ll make it even harder to pay off your next monthly bill.
If you can afford it, it’s worth it to pay off your credit card bills as soon as possible. If you put it off, you can eventually end up paying double the cost of your purchases. (Remember those awesome boots you bought for $250? They’ll end up costing you $300–$400 if you maintain a balance for a few years.)
5. Canceling subscriptions you no longer use
A monthly subscription fee of $9.99 may seem like a steal (especially when you compare it to what you used to pay for cable). But if you have a bunch of these subscriptions and don’t really use them anymore, you could be spending over $100/month for no reason.
To avoid paying for services you no longer use, keep a close eye on your credit card bills. If you catch unnecessary recurring purchases quickly, you can potentially save lots of money.
So that’s it. Time to stop procrastinating and take care of these important financial to-dos.