Yes, we all know it and we've all done it before: put off something. For example, we had to study for an exam and suddenly even cleaning up the apartment was the more pleasant alternative. Unfortunately, the brain learns that procrastination has positive consequences in the short term (tidy home).¹ However, the unfinished task remains in the back of our mind and procrastination is unlikely to make us feel good.

This phenomenon is referred to as procrastination, i.e. the deferral of a task despite possible negative consequences.

As a result, many of us also suffer from procrastination when it comes to finances. Especially when it comes to long-term financial planning. A survey by AXA and YouGov (2023)² found out that just under half of all German women (47%) and 37% of men who actually want to take care of their financial future and retirement planning postpone them. Among younger survey participants, the figure was even more than half.

But why do we postpone financial action? One fundamental problem is that our brain prioritizes short-term needs over long-term goals. Because by meeting short-term needs, we also receive immediate rewards. That's nice for now. However, the feeling of reward wears off quickly. When it comes to finances, the main reasons are also usually too little financial knowledge, too little money, too little time and simply other priorities. In addition, many people do not feel sufficiently taken up by existing financial offers or simply do not enjoy finances. And when they then muddle their way through the financial jungle, studies show that women in particular often find it difficult to implement it because they are afraid of making wrong decisions and mistakes.^3.4 Understandable.

However, in the worst case scenario, this leads to financial stress and economic consequences such as loss of returns or even poverty in old age.

But how can you counteract such procrastination?

1. Financial decisions can quickly become overwhelming. The large number of offers and products can be overwhelming. And when we feel overwhelmed, we often don't know how to even start with anything. Then we try to do everything at once and end up doing nothing at all. It is therefore important to break down large projects such as financial management and retirement planning into small, feasible tasks.⁵ True to the quote from Mark Twain: “The secret of getting ahead is getting started. The secret of getting started is breaking down complex, overwhelming tasks into small, manageable tasks and starting with the first of them. ” That's how you get into action for the first time, set yourself more realistic goals and can celebrate small successes.

2. Talk to others about finances and money, exchange ideas and even look for colleagues. It's much easier together than alone. Talking about money is often associated with shame or is considered too private, but has several advantages. It increases financial well-being, increases financial knowledge, makes finances more transparent and makes us take care of our finances.

3. Set fixed appointments for us, for example a monthly date with us and our finances, which we make as pleasant as possible, with a delicious coffee or glass of wine. Through fixed planning, we prioritize our financial management in our stressful everyday life.

4. Trick ourselves — In the end, finances are a bit like dieting. In one week, we can easily imagine living healthier, for example eating an apple instead of chocolate. On the day itself, we find it much harder for ourselves. So link your plan in the future, e.g. saving a fixed amount, directly with automation (e.g. setting up a standing order) today.

5. Use financial offers, incorporate financial psychology or educate us about them. Because that makes it easier for us to make good decisions for our financial future.⁶

In the end, it's like this: Almost everyone puts off tasks. However, finances are so important that in this case we should overcome our procrastination or simply cannot afford it. Starting early is worthwhile for our well-being, but also financially. In this process of getting started, however, we should free ourselves from the idea that actions, such as investing in stocks, funds and ETFs, which often involve a certain degree of uncertainty and risk, represent a long-standing commitment, but also make ourselves aware of the option to try things out, learn as we do (after acquiring basic knowledge) and then find the right path for ourselves — with helpful tools, professional advice or together with our private environment.

Source:

1. Deutschlandfunk (2023): What helps against procrastination? ,

2nd AssCompact (2023): Procrastination: Many women postpone retirement planning

3rd Sparkassen Innovation Hub (2021): Female Finance.

4th Futura (2023): Finance for everyone.

5th Psychology today (2023): How to Tackle Financial Procrastination,

6th Money.com (2016): The Science Behind Why You Don't Save (andWhat To Do About It)

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