Procrastination is a major obstacle to financial security for many people. There’s a clear reason so many people procrastinate about their finances, and there are actions that can be taken to overcome this hurdle and take action.
Behavioral finance research makes clear a key reason people don’t act on their finances is there are a lot of issues on the table and choices to consider. There’s also a great deal of information to absorb before a good decision can be made. In short, most people are overwhelmed by the decisions facing them.
Research also shows the way to overcome this problem and make good, timely financial decisions.
First, determine your goals and priorities. A lot of choices are eliminated when you decide what you want and don’t want. That’s why I advise that the first step in retirement planning is to determine the lifestyle you want. From that you can develop a spending and saving plan and many other decisions begin to fall into place.
Second, don’t try to make all the decisions at once. Focus on one area at a time. Determine the priorities in your finances, break the issues down, and spread the decisions over time.
Third, take small steps. People have a sense of success and progress when they take small steps toward a big goal. Make a few easy or obvious decisions. Then, move on to a bigger issue. Keep moving forward like this, and soon enough your plan will be in place.
Fourth, don’t strive for perfection. Financial planning is full of trade offs and compromises. If you wait to find the ideal solution, you won’t make a decision.
Finally, recognize that this isn’t a one-time exercise. Things will change, both in your life and in the external factors that affect it. You need to stay up-to-date and revise your finances when it makes sense. Financial and retirement planning is a life long process. You have to monitor the constant changes, analyze them, and decide what they mean to you.