A practical example

Imagine you have a job interview in two weeks’ time. You feel unwell, but are sure it’s nothing serious, probably just the seasonal flu. A week later, the cough has worsened, but money you’ve saved is intended for a new pair of sneakers, and you don’t want to spend it on a doctor’s appointment. So you take something from the medicine cabinet instead.

A few days before the interview, your body crashes. You can’t get out of bed or even lift your head. You finally call the doctor, but it’s worse than you thought and you miss the interview. You find yourself thinking “Why didn’t I just deal with this sooner?”

Mindset blind spots

This is a classic case study in procrastination, mistrust of the proven process, or simply falling into the trap of reacting to your own subconscious blind spots.

We often run on autopilot, allowing information to slide past without pausing to consider the choices we make or how they impact us.

Our friend chose the sneakers over the doctor and fell into pretty much every common blind spot (cognitive biases):

• Acting on first instinct, influenced by recent experiences
• Focusing only on what he wanted to hear
• Convincing himself he had things under control
• Ignoring the potential long-term consequences of his decision

We know wellness matters

Health and wellness are having a moment, but they should be something to invest in for the future, and not just a trend.

When you are young and healthy it is difficult to imagine a time when simply getting out of bed each day could come with a new and unknown pain or impairment. Yet the choices you make today matter more than you realise. Building a strong foundation early on makes it far easier to manage or prevent small issues before they develop into more serious long-term challenges.

The trap

Let’s come back to the “I’ll deal with it later” trap. Just like ignoring flu symptoms can result in something far more serious, neglecting your finances in your 20s could turn into the financial equivalent of daily new aches and pains in your 50s.

Here are the simple lessons we can learn from the mistakes our friend made:

• Not starting early means small problems can quietly compound into bigger ones. It is better to harness compound growth than to allow problems to compound.
• Choosing short-term gratification compromises long-term value.
• Quick fixes are no substitute for real solutions. Over-the-counter remedies may ease symptoms, but they’re not as effective as an expert diagnosis.
• A crash moment and subsequent losses – unexpected expenses can lead to debt, financial shock and a loss of protection.
• By the time we have regrets, it’s often too late.

In other words:

• Start saving, investing and growing your wealth sooner rather than later.
• Don’t increase long-term risk for immediate satisfaction.
• Focus on the root cause of problems and not just on symptom alleviation.
• Don’t let the real costs catch you off guard.
• Try to avoid thinking, “Why didn’t I just start somewhere?”

Take charge

You already invest in your health, so start doing the same with your money. Because good health without financial stability can leave you feeling stuck.

• Taking budgeting shortcuts is like skipping regular medical check-ups or avoiding regular exercise.
• You know you need a medical aid plan, and you use the correct safety gear in your chosen sport or hobby. This is much like having risk cover for death, illness and disability.
• Investing and growing your money is similar to doing strength and resistance training, as both are investments in mobility, flexibility and endurance.
• Look at the bigger picture. Just as maintaining your heath involves making incremental changes over time, planning for a rewarding retirement starts now, even if only starting with a small amount.
• And then there are the ‘what ifs’ – what if I can no longer run, cycle or go to the gym? What am I going to do then? While the ‘what if’ of untimely death may seem distant, estate planning allows you to make arrangements in case it happens.

Take control by engaging, one step at a time. Make your own rules and don’t fall into your own mindset traps.

Starting small

Imagine you are 25 today and your first pay cheque at age 18 was step number one. What if, from that moment, you had set aside just R50 a month in a unit trust fund. No increases. No big commitment. Just a small, consistent habit.

If your money had been invested aggressively and delivered returns of around 11.50% per year, that small and simple trade-off could have grown into R6 275 in your investment account today.

If you are 30 today and had invested just R50 of your pocket money into a retirement annuity every month from the age of 13, instead of spending it, the outcome could be surprisingly meaningful. With no contribution increases and no major sacrifices, your investment of R50 a month could have grown to around R24 239, assuming a conservative annual return of 9.50%. At a more aggressive return of 11.50%, it could have reached roughly R29 457.

You are not alone

It’s not about how much you start with. It’s about how early you start and how consistent you remain. It’s about beating your own prejudices.

Your pocket and bank account might feel the pressure if you start today, but they will surely be smiling in the future, so choose to invest time in yourself.

You don’t need to do it alone either – speak to a qualified financial adviser, who will help you take control of your financial future.