35,000—that’s the number of decisions we make each day, but seven in 10 of us postpone those that involve finances. And it’s a lack the knowledge, not money, that leads to procrastination as a result.
The latest research from Principal Financial Group and behavioral economist Dan Goldstein found that 70 percent of Americans say they have postponed decisions about money matters. Over half haven’t made large purchases, touched investments or reallocated retirement account assets within the last three years.
According to the study, people who think they lack sufficient financial knowledge are 64 percent more likely to put off these types of decisions—no matter their income. This is a significant obstacle considering only three in 10 respondents are comfortable with their level of know-how.
“When it comes to money, our present self is more prone to spend, whereas our future self wants us to save,” Goldstein said in a statement. “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.”
The report posits that money misconceptions are at least partially responsible for consumers’ indecisiveness, and goes on to debunk three common myths.
Myth #1: “I’ll never know enough to be confident in these types of decisions”
The reality is those who educate themselves even somewhat about financial planning are 75 percent more likely to feel confident when it comes to finances. They’re also 88 percent more likely to consider retirement saving a top priority.
Myth #2: “It’s just not the right time”
Respondents claim they would make money moves if a major incident occurred, but data show exactly the opposite is true—they would be more likely to stall. In fact, four in 10 would postpone a financial decision in the wake of a job-related event.
Myth #3: “I don’t have the money to make these financial decisions”
Data prove debt and current finances are insignificant when it comes to avoiding these decisions—so much so that nearly a quarter of households with high incomes report postponing financial decisions, too.
“With access to traditional pensions declining today, the onus of preparing for retirement continues to shift to the individual,” said Jerry Patterson, senior vice president of retirement at Principal. “Features like employer-offered auto-enrollment and matching have aided those efforts, but this doesn’t solve the problem of a lack of financial literacy and its implications on confidence.”
“Fortunately, we now have more ways than ever to educate the world through a smart mix of human interaction and intuitive technology—things like virtual coaches and digital advice for individual investors.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
