New research has found a few helpful tips we can use when making financial decisions. When it comes to making decisions about money, many of us go running in the opposite direction. According to science, we do this for a few reasons: because we have too many choices, we're happy to defer the decision to a partner, or we don't feel we have the expertise to make the decision.
The study, which was published in Journal of Consumer Research, suggests there's another reason. Consumer behaviour expert Aner Sela's research says our inability to make decisions about finances stems from stereotypes about money.
“There’s something that feels very cold and unemotional about financial decisions,” Sela says, a marketing professor at the University of Florida’s Warrington College of Business. “The more we see ourselves as emotional decision-makers, the more we see financial decisions as something that’s just not for us.”
The researchers expected that this perception of emotional decision-making would be prevalent in other areas. However, they found that this phenomenon was unique to making decisions about financial matters, even when participants were knowledgeable and confident about their personal finances.
“It surprised us how unique and how extreme these effects were when it came to financial decisions,” Sela says.
Researchers recommend ignoring the old adage to use your brain and not your heart when making financial decisions as it is causing people to avoid some of their choices.
When researchers posed financial decisions as lifestyle choices, participation became less likely to avoid making the decision. Sela says picturing a pleasant outcome in the future rather than thinking about making an unpleasant decision will help you make those tough money decisions.
“It treats the whole thing as a game, encouraging couples to think about how they would like their life together to be in the future,” Sela says. “Those types of products or interventions can really go a long way.”