Five ways to tackle important financial decisions head on
Brits choose to spend more time planning a holiday than ensuring they have the right pension arrangements in place, a study has shown.
More than four million Brits say they do not have enough mental space to make difficult decisions, particularly those relating to their finances, according to the latest research from Scottish Widows.
The life insurer also found that 6.4 million people feel they don’t have adquate time to complete important life admin.
This helps to explain why 52% of Brits spend significant time and effort making sure they pick the best possible holiday destination. However, only 29% spend the same amount of time and effort making changes to their pension arrangements.
The research suggests that a large proportion of people spend too much time “sweating the small stuff”, which reduces their energy and head space to engage with more important life choices. This means a large proportion of the population are failing to make key financial decisions.
For example, 51% of those surveyed hadn’t decided whether or not to purchase critical illness cover, while 47% had never even considered making changes to their pension. In addition, close to two in five were yet to make a decision about whether or not to buy life insurance.
Even when people finally tackle important financial decisions, Scottish Widows found that they don’t always give it their full attention. For example, 52% of the sample admitted to managing their money while watching TV in the background and 11% do it while at work.
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.”
How to tackle difficult decisions
Professor Mark Fenton-O’Creevy, Professor of Organisational Behaviour at The Open University Business School, says the starting point is to make small changes to create more mental space for important decisions.
“From planning when and where we tackle life admin to recognising when we’re not in the right frame of mind to make important decisions could make a big impact on our mental wellbeing,” he said.
Here are his top tips to help you to avoid putting off difficult decisions:
- Plan when and where you do your life admin – Pick a quiet location free of distractions, such as the television or children, and choose a time when you know you will be feeling refreshed and able to give it your full attention.
- Recognise when you’ve had a difficult day – You will be more likely to give in to impulses rather than thinking things through carefully. Allow yourself to recover before making important decisions.
- Avoid important decisions when you’ve skipped a meal – Low blood sugar can increase decision fatigue and reduce self-control (that is one of the reasons why diets can be hard to stick to).
- 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.
- 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.