- We procrastinate – Dr Joseph Ferrari, associate professor of psychology at De Paul University in Chicago, suggests that procrastination has become a persistent self-regulation problem in modern Western culture. Since starting is the hardest part of any action, it can often take years before we act on our thoughts.
- We lack the right tools or education – there is essentially no financial curriculum in Australian schools at the current moment, meaning that young adults are graduating high school with no idea about superannuation, basic budgeting, or money principles. Without this knowledge, most people don’t even know where to start, even if they want to.
- We don’t take a consistent approach – even the simplest concepts can be hard to maintain over a long period of time. We need patience, discipline, and long-term guidance to ensure that we make the most of our time.
Why we should encourage young people to save As a young person it is easy to get carried away with the idea of new clothes, trendy breakfasts, and exciting holidays. Most of the time, money management is the last thing on your mind. What most young adults don’t realise is that they are missing out on a decade of opportunity, where “starting small and starting early” can make all the difference to their future wealth. As illustrated by this simple chart from research house, Morningstar, the monthly savings required to accumulate $1 million by age 65 increases by over $5,000 per month if you delay your financial management until age 55. By starting at age 25, you only need $405 per month to accumulate $1 million by retirement age. Clearly, starting earlier is the much easier option. So why do we struggle so much to put these thoughts into action? We can narrow the cause of our inefficiency down to three main factors: