There are times when "doing something tomorrow" is no big deal. Not to knock clean socks or anything, but waiting one more day to do laundry isn't likely to cause a catastrophe. But there are times when pushing important tasks off can cost you — literally. Here are nine times procrastination can hurt your bank account and financial health.
1. Opening a 401(k) or IRA
The longer you put off opening a retirement account, the longer you'll wait to retire. But you're also leaving big money on the table — and not just if your employer matches a portion of your 401(k) contributions. The interest on 401(k) and individual retirement account investments compound, meaning you earn interest on the interest. In other words, the sooner you invest, the sooner the returns on those investments can snowball. Learn more about compound interest.
2. Paying a credit card balance
Here's an instance where interest works against you. Credit card annual percentage rates (APRs) currently average around 15% to 17%. Let's say you qualified for a rate right in the middle and are carrying a $1,500 balance. Sticking strictly to minimum payments (interest, plus 1% of your balance) will take more than 10 years to pay off. It'll also tack on more than $1,500 in interest, meaning you're essentially paying double for your charges. That's why it's a good idea to pay your balances off in full each — or, at the very least, make more than the minimum payments. Check out our tips for paying off credit card debt faster.
3. Getting life insurance
Life insurance rates rise alongside your age. In fact, premiums increase by an average of 8% to 10% every year you put off buying a policy. Any health conditions you develop later in life, like high blood pressure or sleep apnea, will lead to higher rates too. So if you need life insurance, buying a policy while you're still young and healthy is the best way to save. (We can help you compare life insurance quotes across companies and get through the entire application process.)
4. Taking out a line of credit
It's a huge Catch-22, but you need good credit to get good credit, so the longer you put off opening an account, the longer you won't qualify for the best rates on a loan. That might seem OK when you're not looking to borrow, but chances are, you'll want to buy a car or house one day.
The good news? You don't need to actually go into debt to establish a credit score. You can build credit by opening a credit card, making small purchases and paying your balance off in full by each month's due date.
5. Checking your credit
If you ever need to disprove the adage "what you don't know can't hurt you," look no further than credit scores. They affect almost every aspect of your financial health — from scoring an affordable apartment or mortgage to how much interest you pay on a credit card balance and what premiums insurers charge. So you can't ignore those digits, even if you have no reason to think your score is subpar or aren't in the market for a loan. Errors on credit reports are fairly common and, sometimes, a sign of identity theft. You'll want to spot any problems ASAP.
Fortunately, you can check your credit reports for free each year via AnnualCreditReport.com. There are also plenty of websites like Credit Sesame that help you monitor your credit score for free all year.
6. Meeting Uncle Sam's tax deadline
You face two penalties for failing to meet the traditional April 15 tax day deadline. If you owe Uncle Sam money and don't file your tax returns on time, the Internal Revenue Service will normally charge 5% of the unpaid taxes for each month or part of a month that the return is late (not to exceed 25% of your unpaid taxes).
On top of that, you'll incur a failure-to-pay penalty, which is generally 0.5% of your unpaid taxes for every month (or portion of a month) they stay unpaid (with a 25% maximum).
7. Booking travel
Yes, you can get lucky and sometimes score a last-minute deal. And people who purchase plane tickets or book hotel rooms too early might not get the best price ever, since there's still time to fill seats or rooms. But, more often than not, booking outside the sweet spot — eight weeks ahead of schedule, according to airfare search engine Skyscanner — is going to up the cost of your vacation.
8. Paying a bill
Miss a due date for a credit card, utility, medical bill or more and you'll pay a late fee. You also risk damage to your credit score, since missed loan payments are generally reported to the credit bureaus as our collection accounts, which is where an unpaid non-loan will wind up if you put off paying long enough (usually 90 days).
9. Sitting on subscriptions
We all have subscription services we no longer use. Ditto certain gym or club memberships. While a small charge is easy to brush off each month, those fees add up over time. And if you accidentally let an annual membership auto-renew, you could be stuck with 12 more months of lost dollars. Set aside some time and cancel these money-wasters. Or outsource the task with an app that helps lower your monthly bills.