“If you believe you can accomplish everything by “cramming” at the eleventh hour, by all means, don’t lift a finger now. But you may think twice about beginning to build your ark once it has already started raining.” Max Brooks
Most people have long-term goals: buying a home, starting a business, sending the kids to good schools, losing twenty pounds, enjoying a comfortable retirement. But in today’s fast-paced world, many people put off important decisions until another day. Unfortunately, by the time they realize the urgent need to start working on a good habit; it’s often too late to fully realize those goals. The modest advantage has already worked against them.
As the book draws to a close, it is time for you to take specific for specific actions. The question you need to ask yourself is, “If I want to get there what actions I can take NOW to move closer to my goals and to dissolve any obstacle that stops me from acting immediately?”
There are plenty of excuses for not setting and achieving goals: “I don’t understand investing.” “I don’t have the time to plan.” “I can’t afford to invest.” The truth of the matter is we can’t afford to delay. Unfortunately we can all testify to the lost opportunities, missed deadlines, failed relationships and even monetary losses incurred just because of one nasty habit of putting things off until later.
It is time for us to do a recapitulation of all the times we have felt there is not enough time or that we are not able to start NOW.
The one vital component of the modest advantage you can control is when you start. The earlier you start on your small habits the more powerful the modest advantage works in your favour.
Let’s take financial goals for instance. No matter how much you save for retirement, one rule always applies: the earlier the better. Because of the power of compounding, you have the potential to build up a significantly larger nest egg if you start saving early. In fact, waiting can result in having to come up with a much bigger annual contribution to help reach your retirement savings goal.
How much bigger? Look at the chart below:
At the age of twenty two, Kelly opened an individual retirement account and started contributing $2,000 annually using the money she got from Higher Education Loans Board when she was in campus. If she (as she has always been) consistently does this for the next forty three years and makes a modest 10% rate of return over her working life until she turns sixty five. After forty three years, she will have a cool $1,184,801.
I waited to start saving until I thought I could afford it. I finally realized I needed to start saving at the age of twenty nine. To get the amount Kelly will have by the time she retires, I would have to contribute $3,961 which is almost double her contribution. It also means that I will contribute $56,596 more than she will need to contribute over her working life. That is the cost of waiting for seven years.
Assuming Amanda also decided to join the train at the age of thirty seven years, she will have to contribute $8,828 which is four times more than Kelly contributes. It also means that Amanda will contribute $161,181 more than Kelly will need to contribute over her working life. That is the cost of waiting–The Modest Advantage working against us. If only we knew that starting early meant we saved less annually and enjoyed more savings at retirement.
Finances aside, many aspects of life show you the high costs of waiting. No need to rush recklessly–but procrastination hurts you when you need to act. What are you waiting for?
If this won’t make you start putting aside money today, then nothing will.
Although today’s responsibilities may take up most of your time and attention, it’s important to consider what you want to accomplish in the future:
With a growing family, you may need to buy your first home—or one with more space.
You may want to launch your own business, which could require heavy start-up expenses.
With college tuition on the rise, you may be facing another big expense when your children are ready for higher education.
You may need more money to support the lifestyle you want in retirement—which may last twenty years or more.
With the book coming to a close, it’s a good time to get inspired to do something about the future, your vision, your goals and executing on those goals.
At first it may seem challenging or overwhelming to take new actions to shift old habits but I assure you it will be a fulfilling one in the end.