The US Secretary of State, currently John Kerry today (2013-08-30) in a newscast on the possibility of intervening in Syria due to chemical weapons used there, claimed that there is a high and immediate cost of the US doing nothing in response to that use.
Amartya Sen, the Nobel prize-winning Harvard economist who wrote a book called The Cost of Inaction, is quoted in an Economist article A Dollar now or a Hundred Dollars Later as saying:
“There is indeed an “opportunity cost of doing nothing”, that is, the failure to reap the benefits of an effective intervention.”
There is also a cost of doing nothing in our personal financial lives.
What can happen if you don’t take action?
Do nothing to maintain your stuff.
If you neglect routine maintenance on your assets (real estate, belongings, etc) they may end up damaged, worth less or gone. For several years we neglected to hose down the outside unit of our air conditioner. It filled up with debris causing the cooling to become ineffective. We called in the HVAC repair man and spent good money finding out that we really do need to take action on this at least once a year.
If you neglect to winterize your home, your bank account will dwindle due to increased heating costs.
So, seal up those air leaks, make sure your thermostat is set for economy, wrap those pipes to keep them from freezing and make sure your windows and doors are winter proof.
If you forget to disconnect your hose during freezing weather, or wrap pipes that are subject to freezing, your plumbing may freeze and cause damage that requires a professional plumber to fix.
Use heat tape around pipes in areas that freeze, such as attics or crawl spaces that aren’t snug. Make sure outside faucets are securely turned off and all attachments are disconnected, drained and put back safely away from the possibility of freezing.
If you don’t change the oil in your vehicle, the engine might seize up. Do it yourself, or fork out the $15 – $25 it takes every 6 months or so. This is one of the best ways to make your car last longer and perform better.
Do nothing to build $ for the future.
If you neglect to add to your savings on a periodic basis, you will never accumulate enough to invest and consequently never have access to passive income through dividends and interest.
Even if you can only save $10 a week, socking money away with regularity increases the chance that you will accumulate wealth.
If you neglect to track and monitor your investments, your asset allocation can get off balance, potentially causing you to lose more money than you might otherwise have lost – in a market downturn.
Use your own method, whether that be DIY or funds that automatically re-balance or you use a financial assistant that does it for you.
If you are rich and neglect to draw up a pre-nuptial agreement, you may find yourself a pauper if you ever divorce. Yes pre-nups are one of thse things nobody wants to talk about, but sometimes they are necessary.
If you don’t take action to monitor your bank balances you could end up paying fines for bounced checks. I do it the old fashioned way, but there are many newer simpler options for today’s busy people.
Do nothing to provide proof.
If you neglect to take pictures, movies or make an inventory of your insured home, your insurance company may not be able to reimburse you for the entire extent of your loss if you have a fire or other disaster. If nothing else, just walk through your home with your phone or camera and record while you talk. Then put the result in a location other than your home!
If you neglect to keep accurate records on your tax returns and you get audited by a frowning Uncle Sam, you may have to pay huge penalties for back taxes.
Here is what the IRS says about record keeping.
Do nothing to defend.
The cost of doing nothing extends into every aspect of our lives, not just our finances. Are you being bullied at work? Do nothing and it may be seen as acceptance. Is your condo association board continually costing you money? Volunteer to serve and have more of a voice in controlling costs. I had to learn some of these do nothing cost lessons the hard way. Have you?
Describe a time when you did nothing and it cost you please.
The truth is the cost of doing nothing could cost you a lot! Some people dont think about it but by the time they realize it things have gotten out of hand. Spending $20 now could save $500 later. I remember when I got my first car I didn’t take it to get a tune up to save some money. What would have been $75 ended up costing $350 because not getting it tuned screwed something up.
Thanks for sharing your experience.
I really liked this post. Doing nothing can cost you a fortune. Sometimes we just have to force ourselves to do something even when we don’t feel like it. Got to take action if you want results.
Sometimes it is hard to see if you are doing the right thing by taking action, but always sitting things out will never get you ahead – my opinion.
Good article, Marie; the cost of doing nothing is enormous in most cases. Though there are exceptions. I often say that I don’t begrudge university managers their salaries if only they didn’t get the idea they should be earning those :).
Ha ha…. sometimes it is better if people don’t do their jobs….. I think lawmakers ought to have to abolish an existing law in order to vote in a new one!
People always seem to want things to be perfect before they do anything, and then miss out on opportunities. Sometimes, perfect really is the enemy of the good! Action is almost always better than inaction… thanks for the post!
Wise words! Thanks.
Brilliant post Marie! Planning minus an action is barely nothing at all. People need to make an action if they are planning for the future they can start with small savings but consistent, even how much the amount would be.
I am a long time procrastinator and is has often cost me. I make a point of doing my bike maintenance on time to avoid those costs, but can wait weeks to buy a flight and see the price go up $500…
lol, I’ve done that flight thing too!
The cost of doing nothing may be most expensive, and is not a buzz word..