How procrastination affects your finances?

“Procrastination is the thief of time.” – Edward Young

Remember that time when your teacher asked you to make a project and pass it in two weeks? Yet, you spent most of the time playing Mobile Legends or Call of Duty? How about that time when your boss asked you to do some work which is due in three days but spent most of your time binge-watching your favorite K-drama?

This is a habit that all of us are guilty of —– procrastination. We Filipinos even have a term for it,  the “Mañana Habit” which means “mamaya na” and refers to doing something in a later time.

You may think that procrastination only relates to tasks such as household chores and school works. But this is also taking a huge toll on your finances. Procrastination is related to unhealthy financial behaviors such as failure to build an emergency fund, last-minute shopping, and unable to pay bills on time.

Most Filipinos are not able to build an emergency fund or plan for financial security. A survey conducted by the Bangko Sentral ng Pilipinas (BSP) in 2017 revealed that 86% of Filipinos don’t have bank accounts for a variety of reasons. This shows that the majority of Filipinos lack financial literacy. Having a bank account is essential for building an emergency fund and for safeguarding your savings. Many Filipinos disregard saving money, feeling they can do so “next time” or when their finances are more stable. Until they encounter a problem and regret not taking action ahead of time.

Signs of financial procrastination:

1. You’re not saving money.

Everyone has promised themselves to start saving money. But not almost everyone is executing it. To save money, you must dedicate a portion of your income entirely for savings. The rule of thumb is to save 20 percent of your monthly income. So if you earn 20,000/month, you must save 20% of it which is 4000. Imagine this, if you have worked for 5 years in a job that earns you 20,000/month and saved 20 percent of it every month, you could have saved 240,000! You would have had an emergency fund and extra money you can use to start a business or invest.

2. You do not have an emergency fund

A lot of people underestimate the importance of an emergency fund. An emergency fund is the amount of money you should set aside to cover unforeseen expenses such as medical expenses, home repairs, car troubles, unemployment, etc..

This will help you survive in times of need instead of taking on debt. Financial experts suggest building an emergency fund 6 months worth of living expenses. If you spend 10,000 a month for your expenses, you should have at least 60,000 pesos worth of emergency fund. If you still don’t have an emergency fund, start saving now instead of waiting for a tragic event to happen.

3. You’re not saving for Retirement

A survey by AXA Philippines showed that 83% of Filipino workers intend to keep a job after retiring, significantly higher than the global average of 54%. Ironically, the same survey showed that the average Filipino thinks about retirement at the age of 28, compared to 33 years old in the global average. This conveys that majority of the people are not taking action. If you want to have your dream retirement, start saving and investing now In the future articles, we will discuss how to start saving for your retirement fund.

Whether you’re saving money for your retirement, emergency fund, or to start a business, setting financial goals and acting now will help you reach your destination. Just put in mind that procrastination is costly, it is difficult to make up for lost time. You can take advantage of the time if you start now. Save and invest your money now, and reap the benefits later. To achieve your financial goals, please talk to a registered financial consultant as they would assess your financial standing and help you stay on the right track. A Registered Financial Consultant will also help you create a financial plan tailored specifically to your financial goals.

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Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs or circumstances as your fiduciary. This column is mainly for your entertainment and education only.