Four million consumers put off financial planning because of decision fatigue

It’s not just about having time to dedicate to decision making. It’s also about how much effort we give to these decisions. The research reveals that more than half (52%) of consumers always ensure they are making the best possible choice when picking a holiday destination. This is a stark contrast to less than one in three (29%) who say this about making changes to their pension arrangements. One in five (18%) admit to focusing on making the best possible choice of dinner on a typical week night.

This suggests a risk that these people could be spending too much time ‘sweating the small stuff’ and therefore reducing the mental energy available for engaging with more important life choices.

The research reveals that a large proportion of people are failing to make important financial decisions. More than half (51%) haven’t made a decision on whether or not to purchase critical illness cover. Just under half (47%) have never even thought about making changes to their pension. Plus, almost two in five (38%) haven’t come to a decision on whether they’ll buy life insurance or not. One in five (19%) say they put off financial admin because it’s too time-consuming, while 17% say it’s too stressful.

When people do finally tackle important life decisions, such as their finances, they don’t always give it their full attention. One in 10 (11%) manage their money at work and 44% sort theirs while sitting on the sofa. More than half (52%) admit to dual screening, with the TV or a movie on in the background.

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.”

Professor Mark Fenton-O’Creevy, Professor of Organisational Behaviour at The Open University Business School and expert on financial decision making, said: “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. 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.”

Professor Fenton-O’Creevy’s 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.

Fenton-O’Creevy added “Our ability to make choices is like a muscle, it gets exhausted and we need time to recover. This is especially true of choices that require hard thinking or involve difficult emotions. Life is becoming more complex and for many, more stressful. This ‘decision fatigue’ can reduce our mental energy for making important life choices and could lead to some people missing out because they’ve avoided making decisions or made poor choices.”