January 24, 2017
One in every three Australians regret a financial decision they made with their gut, new research has found.
According to new data from Mortgage Choice, 36.2% regret a financial decision that they made on gut instinct and without guidance from family, friends or a finance professional.
“By comparison, our data found less than 10% of Australians regretted a financial decision that was made after seeking financial assistance,” Mortgage Choice chief executive officer John Flavell said.
“This just goes to prove that the more informed you are when making financial decisions, the more comfortable you will feel with those decisions down the track.
“When you make financial decisions after doing your research and speaking to the appropriate professionals, you will inevitably have more faith in the end result.
Behavioural economist Dr Lionel Page agreed and said the better informed people are when making financial decisions of significance, the less likely they will be to regret those decisions in time.
“We recently conducted a field survey at Sydney's Bronte Beach, which looked at people's comfort and attitude towards risk,” he said.
“We asked all participants to blow up a balloon using a bike pump. Each time they used the pump, they earned themselves $5. They were told they could opt out of the experiment at any time and walk away with the money that they earned. However, if they pushed their luck and the balloon burst, they would ultimately walk away with nothing.
“This experiment clearly highlights the fact that different people have different attitudes towards risk. It also showed us how they felt after they had made a financial decision which was unusual.
“People often regretted their decision because they felt as though they lost their chance at winning some money or more money depending on the outcome of the experiment.”
Dr Page said while the experiment was “a bit of fun”, it highlighted just how important it is for Australians to seek out professional advice when making important financial decisions.
“When faced with big and unusual financial decisions, people often find it difficult to understand the degree of risk they are willing to face,” he said.
Mortgage Choice CEO John Flavell agreed and said all Australians should seek out the advice of a mortgage broker or a financial adviser before making life changing financial decisions.
“Whether you are buying a home, planning for retirement or just wanting your money to work harder for you, it is imperative that you seek the right financial advice.
“At the end of the day, you don't want to regret any financial decisions you make. If you want to make better choices for a better life, it pays to speak to a professional.”
To watch the video of the field survey, click here.