If you are rubbish at making financial decisions, don’t worry too much – you are one of millions under money pressures that make you a sucker for marketing that lead you up the wrong money path time after time.
That’s why so many opt for payday loans at interest rates of up to 5,000% a year and pay twice as much for the latest TV when shopping around could save them a fortune.
It’s probably no consolation, but according to the World Bank, you are more than likely not good with money because you are poor, borrow too much and do not save enough.
That is not meant to be blame, but just stating the facts, says the report.
If that’s not bad enough, the report lists lots of other reasons why people are bad at handling cash.
- Self-control – A US university experiment gave children the chance of eating one sweet now or waiting for 15 minutes for two. Few could wait for more than three minutes. People are the same with money – they would rather take what they can get than wait for a bonus.
- Bad genes – Some people are just prone to making bad financial choices because they lack the sensible money gene. Doctors identified a single gene as the one that aids financial decision making, and you have either got it or you have not.
- You are not 53 – This is the peak age for making the best financial decisions. Earlier or later and your likely to make riskier decisions
- Maths is not your thing – You are just not equipped to work out your finances because you are no good at mathematics.
Take this simple test – a camera and case cost £110 and the camera cost £100 more than the case. How much does each cost? If you said the case was £10, then you are wrong. The case is £5 and the camera costs £105.
Ever wondered why stores offer three for two and two for one pricing. It’s because people get in a muddle with maths.
- No one knows when they will die – Working out how much cash you need for pensions and retirement is at best a guess for this reason
- Too much choice – Why do banks and building societies offer so many similar accounts, loans and mortgages. In the end too much choice overwhelms many of us and we end up settling for a deal we don’t really want. Financial misselling is a good example of this.