Are British Consumers Overwhelmed by Personal Finance Dilemmas?

Financial decision-making is fraught with worry. What if you make the wrong choice? In practice, you’re stuck with the consequences either way, so you may as well try to work it out and hope everything falls into place. Unfortunately for many Britons, making finance decisions is easier said than done, leading to a type of financial paralysis.

You’re not alone if grappling with weighty monetary issues leaves you unable to act with conviction. Recent research suggests a substantial share of the population experiences difficulty making financial decisions.

Personal Financial Paralysis

If you’ve ever lingered too long over a financial decision, you may be a victim of financial paralysis. Occasional quandaries are expected, but when you freeze-up repeatedly under financial pressure, it may be a sign of a more pervasive problem.

According to research on the subject, as many as four in ten Britons have experienced personal financial paralysis, resulting from fear of making poor choices. Furthermore, when the condition sets in, research suggests financial decision-makers either put-off the troublesome decision until a later date, or even more drastic, fail to take decisive action of any kind.

When fear interferes with financial follow-through, inaction can have costly financial consequences. It is thought delaying or sidestepping important financial decisions about mortgages, personal loans, and credit cards cost each UK consumer nearly £1,600 in 2018.

Research findings brought to light by Freedom Finance and Professor David Hillier, a Strathclyde Business School economist, shed light on British behaviour, when facing tough money decisions. According to the data, it only takes an average of 21 minutes, before consumers contemplating personal financial matters give up on making a decision.

Paying a Price for Indecision

In order to quantify potential losses among financial decision-makers who failed to act, the study looked at UK residents with a mortgage, credit card, and/or personal loan. The methodology was particularly concerned with consumers who hadn’t switched a mortgage, credit card, or personal loan during the 12 month period. By comparing their terms to available market borrowing rates, researchers arrived at £1,598 as an average figure thought to have been lost by each person failing to make a switch.

One explanation for people’s indecision may be the wide array of choices available to individuals managing money. With too many financial options from which to select, it is thought some people simply move decisions to the back burner. Or they become overwhelmed by the process, making it difficult for them to see which option is best-suited for their circumstances.

More than 4,000 participants were polled to compile the sample, which indicated one-third of those surveyed do not like making important personal finance decisions.

Knowledge Empowers Decision-makers

Confidence and clarity may be the missing ingredients, preventing some financial decision-makers from acting swiftly. As a result, a call has gone out to lenders and other financial services professionals to help ease anxiety about money. Streamlining the number of options available to consumers and presenting clearer choices may be all that’s needed to ease the strain of personal financial paralysis.

Access to information can help you reach decisions when finance questions arise. For example, lender listings are available, highlighting interest rates and loan terms from various providers. Whether you need a payday loan or another type of personal financing, reviewing your options online can alleviate pressure and point you to the best financial products for your funding needs.

Personal financial paralysis is a condition potentially affecting 2 in 5 UK consumers. When struck with this kind of financial indecision, individuals commonly delay important financial deliberations, or simply abandon tough decisions altogether. If you’re prone to finance paralysis, expanding your financial understanding is one way to ease worry and stimulate clear decisions.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK's most well-known financial institutions.

An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!

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