Save and Invest

How to change your 'someday' money mentality


When it comes to your financial goals, is can be easy to fall into a "someday" mentality. Someday you'll own a house, someday you'll save more for retirement, and on and on. But putting off these goals until some far-off future not only limits your financial potential, it limits the potential for living a full life, too.

Over 70% of people admit to procrastinating at least some of the time when it comes to their financial goals, according to a 2018 study from Fidelity.

The reasons why vary: 45% of boomers do so because they think they have plenty of time to accomplish them, per the report, while 39% of millennials say they do so because they "either panic, worry they won't succeed at the task, or get overwhelmed about not doing it perfectly." More women procrastinate out of a desire for perfectionism than men.

Research shows that humans have a present bias when it comes to consuming and planning. They prefer immediate gains over future ones, ignoring the potential costs. That's not necessarily always bad: Most people procrastinate, and 33% of people say it's just a part of life, according to Fidelity's report. But it does become a problem if "someday" never comes.

How to go from 'someday' to 'today'

Some of the most commonly avoided tasks, per Fidelity, are making a budget, creating an estate plan, saving for an emergency, paying off debt and investing for retirement.

Obviously, putting off those tasks can affect a person's bottom line, but it also has a ripple effect throughout a person's life. Respondents said they felt more stress and shame as a result of procrastinating, never mind that they were missing out on compound interest.

Here are three strategies a person can take to change their "some day" money mentality.

1. Consider the opportunity cost

Behavioral economists find that "loss looms larger than gains," meaning people are more likely to think of a financial loss as more painful than a comparable financial gain as positive. That can be used to a person's benefit: Figuring out how much money is potentially being lost by not investing — or prioritizing debt repayment or switching to a high-yield savings account — can be the catalyst to better financial behaviors.

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Seeing the numbers in black and white can be a wake up call, especially for older generations, like the 45% of boomers putting off financial tasks because they think there's still plenty of time to accomplish them. Charts and calculators abound online to show savers how much they're potentially missing out on when they put off investing. A few years could cost hundreds of thousands of dollars in compounded growth.

Starting off early is also easier. Take saving for retirement: The person who starts investing in their 20s will likely have to invest a lot less each month to reach, say, $1 million, than those starting in their 30s, 40s or beyond.

Thinking about those potential losses, and making calculations on the difference between tackling financial tasks now or putting them off for a later day grounds a person in the present. Instead of thinking about someday, they know what they can accomplish today.

2. Eschew perfectionism

Perfectionism can wreak havoc in many aspects of our lives, and women and millennials are particularly vulnerable when it comes to it negatively affecting their finances, according to Fidelity.

Take investing, for example. Many people, and especially women, are worried that they are not knowledgeable enough to get started, so they put it off, accumulating money in a savings account but never taking the next step.

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But there's no such thing as "perfect" when it comes to money or investing (or anything in life, for that matter). People overspend, fall into debt or save less than they'd like all the time. Instead of feeling trapped by perfectionism, give yourself permission to mess up and move on.

Understanding the basics of the task at hand, and forming and sticking to a financial plan, are more important than being perfect.

3. Create a 'fresh start' day

Everyone's familiar with the vigor people feel around the New Year to create and stick to goals and resolutions. Research from Katherine Milkman, a professor at the Wharton School of the University of Pennsylvania, and her colleagues suggests that people can create this "fresh start" effect any time they choose.

Milkman and her team's research finds that giving significance to a day — say, starting fresh on the first day of spring — motivates people, because it marks a division between an imperfect past and a potentially better future.

Yes, ultimately the date may seem arbitrary, but Milkman's research indicates that picking a day with some form of significance can encourage people to really think through their goals and take the extra steps to accomplish them.

That could be the start of a new semester, the beginning of the week, a birthday, or, yes, the first day of spring.

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