The High Cost of Waiting: Why Delaying Saving and Investing Hurts

Procrastinating on saving or investing is like deciding to start a long journey on foot, but delaying your first step day after day. At first, it might not seem like a big deal. You’re comfortable where you are, and the journey looks long and perhaps a bit daunting. However, with each day you put off starting, you’re falling further and further behind where you could be, and making the eventual journey much harder.

In simple terms, when you procrastinate on saving or investing, you miss out on the incredible power of time and compound growth. Think of compound growth like a snowball rolling down a hill. It starts small, but as it rolls, it gathers more snow, becoming bigger and bigger at an accelerating rate. With investing, your money can earn returns. These returns then earn their own returns, and so on. This snowball effect is most powerful over long periods.

Let’s imagine two friends, Sarah and Tom, both aged 25. Sarah decides to start saving and investing $200 per month right away. Tom, feeling like he has plenty of time, decides to wait until he’s 35 to start. Let’s assume they both earn an average annual return of 7% on their investments (which is a reasonable historical average for the stock market, though returns can vary).

By the time they both reach 65, Sarah would have been investing for 40 years (from age 25 to 65), and Tom would have only been investing for 30 years (from age 35 to 65). Even though Tom is investing the same amount each month, Sarah’s money has had a whole decade longer to grow and compound.

The result? Sarah, who started early, will have accumulated significantly more wealth than Tom, even though she didn’t invest any more money overall. In fact, Sarah would have invested a total of $96,000 ($200/month x 12 months/year x 40 years), while Tom would have invested $72,000 ($200/month x 12 months/year x 30 years). However, due to the power of compounding over those extra 10 years, Sarah’s final amount would be far greater than just a $24,000 difference. She could potentially have hundreds of thousands of dollars more than Tom, depending on the actual market returns over those periods.

Procrastination also means missing out on opportunities. Investment opportunities can arise at any time. If you’ve started saving and investing early, you’re in a position to take advantage of these opportunities when they come along. If you’re constantly putting it off, you’re not building the financial foundation that allows you to seize these moments.

Furthermore, the longer you wait to save and invest, the more you’ll likely need to save later to reach the same financial goals. Let’s say both Sarah and Tom want to have $1 million saved for retirement. Because Tom started 10 years later, he would likely need to save significantly more than $200 per month to reach that same $1 million goal by age 65. He would be playing catch-up, and it’s always harder and more stressful to catch up than to start on time.

Think about it like learning a new language. Starting young and practicing consistently over time makes fluency much easier to achieve. Trying to cram all the learning in later in life is much more challenging and often less effective. Saving and investing is similar – consistency and time are your greatest allies.

In essence, procrastinating on saving and investing steals time from you. It robs you of the potential for your money to grow significantly through compounding. It makes it harder to reach your financial goals, and it can limit your financial flexibility and opportunities in the future. Starting early, even if it’s with small amounts, is vastly more beneficial than waiting, and it’s one of the smartest financial decisions you can make. Don’t let procrastination erode your financial future – take that first step today.