We Make 35,000 Decisions Per Day, But 7 in 10 Postpone Major Financial Decisions
Seven in every 10 Americans postpone making financial decisions, according to findings released today from a research project by
According to the findings, more than half of Americans (56%) have not made any major financial decisions, such as a large purchase, opening or closing an investment account or moving money around in a retirement plan, in the past three years. While 60% of people report their income as the top reason for inaction, the research shows that debt and current finances do not play a significant role in people's likelihood to make financial decisions.
So, what does explain this idle behavior? The research found less than a third (30%) of Americans feel comfortable with the amount of knowledge they have about managing finances.
"With access to traditional pensions declining today, the onus of preparing for retirement continues to shift to the individual," said
Goldstein, who is known for his research into financial decision-making, said: "Every day, we make decisions that have good or bad consequences for our future selves. When it comes to money, our present self is more prone to spend, whereas our future self wants us to save. This research highlights that tendency to postpone, but illuminates how the right attitude could help people 'hack' their approach to saving for things like retirement."
Busting financial decision-making myths
People have their reasons for postponing financial decisions, but those reasons aren't as insurmountable as people think. Some of the circumstances people consider to be barriers are, in reality, challenges that can be overcome with the right frame of mind.
Those who do not feel confident about their finances are 64% more likely to postpone making major decisions than those who are confident, regardless of their income. But as it turns out, there are plenty of people with similar reported financial barriers who do, in fact, manage to invest and save for retirement successfully. The research reveals that people's indecision is largely grounded in myths and misconceptions.
Myth #1: "I'll never know enough to be confident in these types of decisions"
People who spend some time learning about financial planning are 75% more likely to be confident in their financial future, which can positively impact their decision-making and retirement preparedness. People who are confident in their financial future are also 88% more likely to rank retirement as their top priority.
Myth #2: "It's just not the right time"
People report they would take financial action if a major life event happened. In reality, people who experience a major life event are more likely to postpone financial decision-making. Job-related events are 40% more likely to cause people to postpone a financial decision.
Myth #3: "I don't have the money to make these financial decisions"
Many people report having too much debt or not enough income to plan financially, yet debt and income level do not play a large role in determining whether people postpone decisions. In fact, even 1 in 4 (23%) of households with a high-income level always or regularly postpone making major financial decisions.
Patterson added: "As the research suggests, the importance of confidence in people's financial decision-making can't be overstated. We at Principal want people to know that no matter where you're at financially, it only takes a couple small steps to start building confidence in your finances and making the right decisions to live your best life."
For more information to build confidence in your finances, use Principal's free planning tools and calculators, explore topics on life and money, or consider registering for an upcoming webinar on a financial topic that matters to you.
Lead Magazine Features Western & Southern’s 130th Anniversary
5 Members of Slip-and-Fall Scheme Charged With Defrauding New York City-Area Businesses and Their Insurance Companies of More Than $31.7 Million
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News