The Cost of Procrastination

Procrastination is a habit and habits die hard. The dictionary meaning of procrastination is ‘to delay or to postpone action’. Most of us, sometime or the other procrastinate or delay doing things and only a few of us actually agree or realise. However if we take an example, it shall positively communicate, most of our new year resolution mentions of some or the other way to keep fit either by way of jogging, walking or hitting the gym 5 times a week. All of you are aware of the outcome and the reasons for it, isn’t it? However it is only when the doctor prevails upon us that most of us change.

Whenever we delay or procrastinate we definitely pay a price and at times, it’s very painful. In a broader sense why we procrastinate, fall in these following categories:

1. Comfort with the existing situations and unable to come out of the comfort zone (who will get out of bed early and hit the road in the morning),

2. And we are not at comfort with the new things/situations etc (remember, Who Moved My Cheese),

3. There is a delayed gratification especially after putting in hard work or hard earned money, so let the existing situation continue,

4. No decision making due to confusion and lack of clarity, and lastly

5. For things we have never done in the past, the fear of failure looms large and calls for lots of guts to break the fear psychosis.

Back in June 2008, John and Neha got their financial planning done. John, then 35 years of age had a post tax income of Rs 9.5 lacs and a great potential to invest, however he was pretty fine sitting on a hefty saving bank account balance, sometimes as high as Rs 5 lacs and earning 3.5 per cent. He did not even think of converting a part of it into a fixed deposit, though he  very well knew the power of compounding. With responsibilities still far away, busy schedule at work and above all the comfort of the bank balance he had, he never came forward to implement the plan, though his wife Neha was all for it. What was recommended in a nutshell was something like this:

1. Personal accident cover of Rs 50 lacs

2. Mediclaim for family for Rs 5 lacs each for self and wife and Rs 2 lacs for his son. He had a family cover of Rs 2 lacs provided by the employer.

3. Life Insurance for self at Rs 77 lacs, and

4. Investments for various goals like son Nihar’s education etc. into different asset classes based on the time frame at Rs 45,000 per month which was very much possible.

5. Re allocation of the existing funds according to the goals.

Come 25th August, 2010 John had a pain in the chest and was diagnosed for a heart ailment and had to undergo a surgery which cost him Rs 4.5 lacs, which was funded jointly by the group cover at office and the balance Rs 2.5 lacs by self. Now that he had undergone the trauma, his perception changed and was serious about the implementation of the recommendations, however the situation had changed 360 degrees:

1. He was no more in the insurable category for the Life and medical cover providers unlike 2008 when he could probably have either got the cover or could have got a warning signal on which he would have taken preventive action accordingly then, well in advance

2. He was on bed rest for almost 3 months without salary which consumed the cash balance to meet all the regular commitments plus the cost of surgery that wiped off his savings, a double whammy which could have been avoided with the individual mediclaim cover

4. Lost heavily on the compounding effect since by nature he preferred sitting on cash which lowers the purchasing power with each passing day as the “inflation tax”. Yes, I mean inflation tax since this tax hits each one of us irrespective of our income tax brackets that we all fall into.

He learnt the lessons the hard way. Today his productivity has certain limitations due to health issues and is also advised against taking too much of stress. Additionally, he has to plan for a medical corpus since he was not medically insured and also had an additional medical cost built in almost for life, which brought down the investable funds along with his risk-taking ability. And above that he had to care for himself all the more as he was the only bread earner and the financial cover was not provided for.

There are lots of John’s amongst us; we need not undergo what John had to. Some one very rightly said “The game doesn’t end with the final whistle; it ends after you’ve learned all you can from that experience.”