“Why do it today when I can do it tomorrow?” All of us have said it. While procrastination isn’t always bad, there are times when pushing critical tasks off till later can cost you. Here are five times procrastination can hurt your bank account and financial health.
- Opening a 401(k) or IRA
The longer you put off opening a retirement account, the longer you’ll wait to retire. But you’re also leaving big money on the table — and not just if your employer matches a portion of your 401(k) contributions. The interest on 401(k) and individual retirement account investments compound, meaning you earn interest on the interest. In other words, the sooner you invest, the sooner the returns on those investments can snowball. Click here to learn more about opening an IRA.
- Paying a credit card balance
Here’s an instance where interest works against you. Credit card annual percentage rates (APR*) currently average around 15% to 17%. Let’s say you qualified for a rate right in the middle and are carrying a $1,500 balance. Sticking strictly to minimum payments (interest, plus 1% of your balance) will take more than ten years to pay off. It’ll also tack on more than $1,500 in interest, meaning you’re essentially paying double for your charges. That’s why it’s a good idea to pay your balances off in full each or, at the very least, make more than your minimum payments. If you consistently procrastinate on your payments, consider setting up automatic payments or switching to a credit card with a low-interest rate + cash back rewards to minimize your interest charges.
- Checking your credit score
The term “what you don’t know can’t hurt you” nothing can be more wrong than not knowing your credit score. They affect almost every aspect of your financial health — from getting a good rate on your car, mortgage, and how much interest you pay on a credit card balance. So you can’t ignore those digits, even if you have no reason to think your score is subpar or aren’t in the market for a loan. Be sure to check your score at least once a month. Errors on credit reports are fairly common and, sometimes, a sign of identity theft. You’ll want to spot any problems ASAP. Fortunately, you can check your credit scores for free via AnnualCreditReport.com.
- Booking travel
Yes, you can get lucky and sometimes score a last-minute deal. And people who purchase plane tickets or book hotel rooms too early might not get the best price, since there’s still time to fill seats or rooms. But, more often than not, booking outside the sweet spot — eight weeks ahead of schedule, according to airfare search engine Skyscanner — is going to up the cost of your vacation.
- Sitting on subscriptions
We all have subscription services we no longer use, including gym, club, or streaming services. While a small charge is easy to ignore each month, those fees add up over time. And if you accidentally let an annual membership auto-renew, you could be stuck with 12 more months of lost dollars. Make time to see what you still use and cancel the subscriptions you don’t need.
- Opening a 401(k) or IRA