The biggest obstacle to wealth creation, from a financial psychologist

It’s officially that time of year when you start doing something you’ve been putting off. And for millions of Americans, that means getting a handle on their finances.

If you avoided funding your 401(k) or open a brokerage account, you are not alone. Almost half of US adults – 48% – do not own investment assets, according to a Janus Henderson Poll 2024.

And for many, the reason for procrastination is simple: investing (seems) too complicated.

It’s a mindset that, if not overcome, can cripple many young people financially, says Amos Nadler, founder Professor Wall Street and Ph.D. in behavioral finance and neuroeconomics.

“It’s a bias we call ‘complexity aversion,'” he says. “And it’s the biggest obstacle to wealth creation for people who don’t work in the markets or have never invested before.”

Here’s how this cognitive bias can cost you money.

At the most basic level, people who procrastinate on important financial tasks fear the same fears as those who can’t bring themselves to start exercising—they don’t want to make a mistake or feel stupid.

Just like someone might say they don’t know how all this fancy gym equipment works, someone who avoids funding might say, ‘Man, it’s all over my head,'” Nadler says. “I’m just not a numbers person.”

This attitude toward money is closely related to another common cognitive bias known as risk aversion. Basically, not only are you afraid of screwing up, but you’re also afraid of losing the money you’ve spent time and effort building up. And because the fear of losing what you have can outweigh the joy of building wealth, you stay put.

The impulse is: “I’ve worked hard for this and I’m risk-averse. I’d rather have money,” says Nadler. “I know inflation will eat away at my money, but the market is so volatile that I’m scared.”

But the need to start investing — especially among young people — goes beyond needing your money to keep up with inflation. By delaying this particular financial project, you are missing out on what many experts call yours most valuable asset: time.

The longer you are in the market, the more time your money has to grow at a compounding rate. For every year you delay getting started in the market, you’re potentially shaving thousands of dollars off your future capital.

Play with an online interest calculatorand you’ll likely find that sitting on the sidelines for even a few years can have a big impact on your long-term gains.

Imagine a 20-year-old who invests $200 monthly in a retirement portfolio that earns a total annual return of 8%. By the time she’s ready to retire at age 67, she’ll have $1.25 million saved. If she starts at age 25, all other things being equal, her total will drop to about $830,000. And if she puts it off until age 30, she’ll retire with $547,000.

So how do you get started? You can always open a brokerage account or self-fund a retirement account such as an IRA. It only takes a few simple steps.

But if your employer offers a workplace retirement account, such as a 401(k), choosing can be an even easier way to get started. Determine a percentage of your salary to deposit into the account from each paycheck and choose one or more mutual funds for your portfolio.

These plans typically contain low-cost, highly diversified options, such as index funds and target-date funds, which give investors access to large swaths of the market.

Want to earn extra money outside of your regular job? Sign up for CNBC’s online course How to make passive income online to learn about common sources of passive income, tips for getting started, and real-life success stories.

plus, sign up for the CNBC Make It newsletter to get tips and advice for success at work, with money and in life.