In today’s modern world, humans face more choices than perhaps ever before. You have thousands of TV programmes and films available at the click of a button, an endless stream of books just a download away, and supermarket shelves stacked with innumerable brands.
This might seem like a sign of progress on the surface, yet it’s all too easy to feel overwhelmed by the sheer volume of choices. This sense of mental exhaustion – known as “choice paralysis” – isn’t uncommon.
According to research from Reclaim, 32% of UK adults feel overwhelmed by even basic decisions like what to eat or wear.
This could even affect your finances. When you consider the number of financial products, investment choices, and ever-changing tax rules, it’s easy to see why some might delay making important decisions regarding their wealth.
So, continue reading to discover why choice paralysis happens, and how a financial planner could help you reduce stress and confidently work towards your long-term goals.
Several factors cause choice paralysis, which could result in mental fatigue
Put simply, choice paralysis describes a state of indecision brought on by too many options.
It often arises when you face choices that are difficult to compare, or when there’s no “clear” best option.
Studies have suggested that several emotional and cognitive thought processes contribute to this phenomenon.
One common cause is the fear of making a mistake. Regarding your finances, where consequences can feel significant, this worry about choosing the “wrong” option can be overwhelming.
You might also find that you worry about not making the “perfect” decision, or even that you might be judged for your choices.
Over time, you may also experience “decision fatigue”. This refers to the mental exhaustion that builds up after making too many choices throughout your day, and you may find that you:
- Procrastinate
- Make impulsive decisions
- Avoid making decisions altogether.
This is especially common in areas that involve significant risk or uncertainty, such as your finances.
In fact, a Barclays study of 2,000 UK investors revealed that 38% of respondents ranked deciding how to invest their money among the three hardest decisions in life. Two of the most common reasons for this were:
- A lack of knowledge (44%)
- Fear of losing money (41%).
As a result, investors took an average of three and a half months to make their first investment after considering it. Meanwhile, 8% of those surveyed – equivalent to 1.5 million people – delayed for over a year.
This indecision isn’t just limited to investing, however; you may also experience decision fatigue when choosing a pension provider, selecting financial protection, and deciding how to draw your retirement income.
3 ways you can break free from choice paralysis and regain control
Thankfully, there are several ways to reduce the pressure that often comes with too many financial decisions – read on to discover three steps that could help you regain control and confidence.
1. Simplify decisions and set deadlines
A potential first step in managing complex choices is simplifying them. This could involve narrowing down your options early by identifying what is truly important to you.
For example, if you’re saving for retirement, you might want to identify how much income you’d need to support your desired lifestyle.
This could help you focus on what matters most, rather than getting lost and overwhelmed by the details of every available provider.
Breaking the process down into more manageable steps – such as reviewing your existing pensions, working out your income targets, and looking at the most tax-efficient ways to bridge shortfalls – could also help reduce feelings of anxiety.
Setting soft deadlines could also keep you from getting lost in an endless cycle of research and indecision.
This isn’t to say that you should rush every big decision, especially where your wealth is concerned. However, having some time frame might keep you moving forward, rather than pondering the same choice for months on end.
2. Accept uncertainty
Many people struggle with financial decisions because they fear making the wrong choice. This is particularly true with investing.
Investment markets tend to move up and down, and this volatility can be unnerving, especially when your hard-earned wealth is on the line. But it’s vital to accept that uncertainty is inherent in investing.
For instance, if you’re considering moving some of your cash savings into investments to help it grow over the long term, you might hesitate due to a fear of losing money.
But keeping everything in cash might not help you reach your goals, considering interest on savings tends to offer lower long-term returns than investments.
If you accept that no option is completely without risk, and that your goal should be to make informed decisions suitable for you rather than perfect ones, you could free yourself from the feeling of needing to wait for absolute certainty.
Similarly, as you’re approaching retirement, it might be tempting to draw a significant tax-free lump sum from your pension immediately.
Yet, doing so without understanding the long-term implications could strain your ability to maintain your standard of living later in life.
Staying flexible and open to adapting your plans as needed could reduce the pressure to get everything absolutely right on day one.
3. Work with a professional
Sometimes, the best way to break free from choice paralysis is simply to ask for help. A financial planner could act as a guide, helping you to weigh your options and make decisions with more confidence.
Read more: Why having the support of a trusted financial planner is so valuable
They could offer a calm and exterior perspective, helping you to filter out the noise and stay focused on what really matters.
Most importantly, a planner can support you in making informed and clear decisions so you can continue to work towards your long-term goals without feeling overwhelmed by choice.
Please email us at info@investmentsense.co.uk or call 0115 933 8433 to find out how we could help you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested.
