Have you ever wondered why you make certain money decisions? Let's dive into the psychology of money decision making!
We all know that money plays a fundamental role in our everyday lives, influencing our quality of life, our mental well-being and physical well-being and our security. There is a wide body of psychological research that shows us how and why we make certain decisions around money. Taking the time to understand the research behind our decision-making can help us make better financial decisions and better equip us to navigate the often treacherous world of our personal finance. If you want to have some help, or don’t have time to think about it, Money Compare can help with its user-friendly navigation and bias-free customer support team.
Confirmation Bias
This is a concept in psychology that refers to the tendency that people have to seek out information that supports the beliefs they already have. This can cause them to dismiss any information that doesn’t align with their beliefs. In the world of finance, this can lead to decision-making based on inaccurate information. For example, if we heard that someone we know had a bad experience with a certain credit card company, we may likely avoid that particular provider, even though they may actually offer the best deal for our unique situation! This is why it is so vital to compare the options out there with Money Compare, to ensure you have all the bias-free information available to you, and in the same place!
Emotional Influence
Emotions such as fear and anxiety can influence the way we make decisions with our money. We may experience fear of missing out and consequently make impulsive decisions, such as buying something that’s on sale, even if we don’t necessarily need it, or buying something without comparing prices. By the way, did you know you can compare prices with easy and free tools like PriceMe? You could also fix on a new interest rate without seeing if the bank can offer you a better one.
Anchoring Bias
This concept refers to the tendency that people have to rely on the first piece of information we encounter when making decisions.For example, you might choose to purchase a broadband plan at the first service provider you see because they have a sale. But by comparing prices, you can see whether that first price is, in fact, the best deal out there. Another provider may have a better offer and one that suits your unique needs better. Therefore, it’s important to keep up to date with the latest retail offerings and our utilities plans and services by making a habit of regularly comparing prices. You can do this easily and quickly with NZ Compare. Compare products for everyday products, broadband, mobile, power, money and more for free!
Loss Aversion
People tend to feel the emotional weight of financial loss more than of gain. This bias can lead Kiwis to be too cautious to take opportunities due to their fear of risk. By being aware of this bias, we can establish a balance between financial risk and gain. Sometimes, it is worth taking a risk for growth! For example, many of us may be getting stung by what’s known as loyalty tax – paying a premium by choosing to stay with the same provider for years. When we get too cautious, we don’t switch providers, and consequently, can be paying more than we need to. Those who make a habit of comparing are often rewarded with lower rates and prices when they switch to a better deal.
Influence of Others
The behaviour of others can absolutely influence the way we make decisions. It’s human nature to follow the crowd! But sometimes, this might lead us to something that isn’t entirely right for our unique situations. Therefore, it’s important to seek information and perspective from lots of people and sources, so that you can make the best decision possible. Comparing at a safe and bias-free place like NZ Compare is healthy for your household and pockets because you can find accurate information on providers and plans available to you without having the opinion of others in your ears. This means you can make the choice that is best for you. You are likely to find a plan that is cheaper and of better value!
Make a Fully Informed Choice
It’s no secret that financial decision-making can be intimidating – especially when these choices will impact many facets of our wellbeing and security. But you can make a fully informed choice with Money Compare. This is an effective way to save money in both the short and long term, and ensure you have all the tools you need to make that decision.
Money Compare allows you to see all the service providers and plans available to you so you can compare them all side-by-side. By having all the information available to you, you are more likely to make the best choice for your financial goals and means, and for your family or household. You will likely find a better deal for things such as insurance, loans, and credit cards.
It’s never been easier to compare with Money Compare.
To do so, follow these simple steps:
- Go to Money Compare
- Type in your address
- Hit enter.
- Browse all the different plans available to you & compare them side-by-side.
- Find one you like and switch!
Or, if you’d prefer to speak to a friendly person, then give our customer service team a free call on 0508 22 66 72. They offer bias-free and hassle-free advice on finance and money-related providers available to you.
From the team at NZ Compare, we wish you a wonderful, safe and sunny summer!