Are you putting off an important financial decision? Millions of us delay making choices due to stress and lack of time - so we reveal
Are you putting off an important financial decision? Millions of us delay making choices due to stress and lack of time – so we reveal five top tips to prevent procrastination
- Research shows 47% of people have never thought of making change to pension
- Many say it is because they don’t have enough time or it is too stressful
- We reveal top tips of how to stop delaying & make tough financial choices
Millions of Britons do not have enough time or mental capacity to make important decisions, including all important financial choices, according to a new study.
Over four million Britons have trouble making the right choices when it comes to difficult decisions, research from Scottish Widows has suggested. Another 6.4 million people said they just don’t have enough time to complete important life admin.
Worryingly, this means that a large proportion of people are failing to make vital financial decisions, which could leave them out of pocket.
The study found 47% of people have never thought about making changes to their pension
The study was carried out online by YouGov in February across 2,062 UK adults aged 18 and over.
The research reveals that 47 per cent of people have never even thought about making changes to their pension with only 29 per cent saying they are making the best possible choice when it comes to their pension arrangements.
A further 38 per cent said they haven’t come to a decision about whether to buy life insurance or not.
Robert Cochran, retirement expert at Scottish Widows, said: ‘It’s easy to get caught up when dealing with day-to-day decisions in our hectic lives, but this is stopping many of us from spending the right amount of time making important decisions, which can impact our financial wellness.
‘Getting to grips with your financial situation, like figuring out if you’re putting away enough for retirement, is a big decision to make about our future, but technology is making it much easier for people to picture their retirement – seeing your future self makes it much easier to make choices now than a bunch of complicated numbers.’
Time is a huge factor for those putting off financial decisions with 19 per cent saying it is too time-consuming whilst 17 per cent say it’s just too stressful.
For those who do take the time to look after their finances, they often do not give it their full attention.
Some 11 per cent manage their money at work whilst 44 per cent sort theirs when at home, sitting on the sofa. Another 52 per cent say they have done this when dual screening with the TV or a movie on in the background.
Putting off financial decisions can have a damaging effect on people’s finances in the future
Professor Mark Fenton-O’Creevy, Professor of Organisational Behaviour at The Open University Business School and expert on financial decision making, said: ‘People will procrastinate when decision makes them feel anxious. They will also procrastinate making a decision if they feel they are incapable of making it.
‘Those who fail to actively plan their finances will make less effective choices. Pensions is a classic example – the government have moved to auto-enrollment as so many people didn’t take action.
‘Research has found that smaller decisions can crowd out the big ones and important, urgent choices get left behind. All unimportant, less urgent stuff becomes a useful distraction from the more important things.’
Putting off financial decisions, unsurprisingly, can have a damaging effect on your finances, for example, delaying dealing with your tax returns can leads to a fine.
In general, the later you make decisions, the less time your finances have to increase in value as is the case with pensions, investments and savings.
Professor Fenton-O’Creevy added: ‘Important decisions about our lives can be easier to tackle if we create the mental space to deal with them.
‘Putting lots of time and effort into everyday choices not only reduces our time and mental resources for more important decisions, it can be a way of avoiding difficult choices we should be making.
‘The good news is that it is possible to make small changes to create more mental space for better choices.’
Top tips on how to make difficult decisions
Professor Fenton-O’Creevy says the first thing you should is to give priority to making time to make decisions.
‘It is easy to say I’ll leave it until next weekend to make a decision but making a very firm intention and saying it is important enough that I carve out time to do this is important.
‘It is also important to recognise when you are procrastinating making a decision because it makes you anxious. If you can, it is helpful to talk through making an important financial decision with somebody.’
Here are his top tips to help make difficult decisions:
1. Plan when and where you do your life admin. Pick a quiet location free of distractions such as the television or children and pick a time when you know you will be feeling refreshed and able to give it your full attention.
2. Recognise when you’ve had a difficult day or are feeling emotionally vulnerable. You will be more likely to give in to impulses rather than thinking things through carefully. Allow yourself to recover before making important decisions.
3. Avoid important decisions when you’ve skipped a meal. Low blood sugar can increase decision fatigue and reduce self-control (that is one reason diets can be hard to stick to).
4. Help restore your capacity for difficult decisions. There is good research evidence for the benefits of moderate exercise, getting outside in a natural environment and even short periods of mindfulness meditation to improve mental energy.
5. Don’t sweat the small stuff. Consider whether you are putting too much time and mental energy into small, unimportant decisions and activities as a way of avoiding the tougher choices. It is all too easy to let urgent but unimportant choices crowd out space for important but less urgent decisions.