Tuesday Tip of the Week: Procrastination and Excuses (continued)
Hi there friends. Yesterday I spoke about what making excuses and procrastination can do to you. I mentioned how it hurt me and how it can hurt you. The reason it can be so harmful is that time is your greatest asset. I showed how saving something as little as $100 a month can be dramatically diminished over the course of time if you wait. Today I am going to give you my top three tips to getting started with addressing your finances right away.
1) Pay off Debt
I know I say it a lot but you have to be debt free. My reason for this is simple. Interest on debt is almost always more than interest on investments. I meet people all the time with 20K to invest but also owe 20K. Chances are the interest rate for the owed money is anywhere from 5% to 20%. That is guaranteed interest. The Bank/OSAP/Credit card get their money plus interest, you better believe it. Any investment you put your money in is rarely guaranteed. So if you are making 8% on your investments but paying 19% on your credit card debt what have you accomplished? The answer is nothing! People say there is good debt and bad debt. The only good debt that exists is debt that generates money for you (ie: a home). Bad debt is everything else including student loans. The time is now to have a concrete plan to pay it off. That leads me to my next point.
2) Invest Your Money
You have to invest your money. You have to or else you won’t retire on time. You won’t have enough savings and won’t be able to get everything you want out of life. You have to be consistently growing your net worth. That means gaining the amazing effects of compound interest. Don’t believe me? Check this out.
Let’s say you save $1000/month from the age of 25 to age 65. If you just saved the money and didn’t invest it you would have $480,000. Now if you invested just $150 a month for the same amount of time you would have $486,508.14. (Given 8% interest compounded) That is pretty amazing how you can invest 85% less and wind up with more money. Not only that, the value of money declines over time. That’s called inflation. So that 400K won’t be worth 400K in 40 years. You have to have your money grow to combat inflation. Don’t delay, start now. Now to my final point:
3) Protect and Understand Your Health
I know firsthand what bad health can do to you. The best time to truly understand your health is when you are healthy. Take the steps to ensure your insurability. What I mean by that is get yourself covered when you are healthy and when it is dirt cheap. Waiting could mean even a slight health problem could cost you more, or prohibit you from gaining coverage at all. Insurance is never fun to talk about but it is the foundation of every successful financial plan. Build, protect, build, protect. What good is saving your money, investing it, buying a home, and planning for the future if getting sick ruins that? Protect your ability to protect yourself.
Taking these steps doesn’t have to be expensive. Doing it right now doesn’t have to be complicated. I’ve shown some of my clients how just $100 a month get gain dramatic results. It’s like working out, you have to start but also keep going. Persistence pays off, procrastination never does.
Thanks for reading my Tip of the Week. Tune in tomorrow for “Wednesday WTF,” my weekly rant about things that waste your hard earned money. Have a Great Day Friends!
“Procrastination is the art of keeping up with yesterday.” – Don Marquis
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Joseph James Francis is a Financial Advisor. You can find him on various social media platforms and at budgetboss.ca.