Ironically, we’re here to tell you that too much information can actually hurt your Financial decision-making. In a sea of experts telling you what to do and what not to do with your money, it doesn’t take long before we feel like our brains start to go a little haywire and our mental capabilities begin to malfunction.
It’s not hard to imagine why. Did you know that within 60 seconds, an estimated 400 hours of video is uploaded to YouTube; 205.6 million emails are sent; 3.3 million Facebook posts are uploded; 55,555 photos are uploaded on Instagram; and 44.4 million WhatsApp messages are sent! Woah.
The brain has its limits
With so much content being pushed to us every single minute, it’s no wonder our brains struggle. Put aside the whole debate that women are better multi-taskers than men, the general consensus is; every brain has its performance limits. Some may be better at juggling a few different pieces of information at once, but everyone reaches a point where ‘new’ information cannot be processed and we ‘switch off’. That breaking point is information overload.
And it doesn’t take much for this to happen. A very simple exercise to see this in action is to do mathematical multiplications in your head while you’re walking. Try it with double or triple digits – like 24 x 53 or 230 x 56. Give your brain a challenge. You’ll notice one of two things happen – you’ll either stop walking to focus on the multiplications in your head, or you’ll lose focus of your surroundings because you’re too engrossed in the calculation. Either way, your brain will make a choice. (Please don’t try this while crossing a busy street).
Sometimes, this is an intentional tactic. Sometimes, shrewd marketeers choose to overwhelm you with a flood of irrelevant information which makes it harder for you to single out key details that may end up hurting your wallet and finances in the long-run, for example hidden fees or a clause that doesn’t clearly state any penalties for late payments on your credit card. As much as we all try to read the Fine Print, our mental capacity just won’t allow it to happen. This is when it poses a danger to your financial decision-making ability, and essentially, your financial future.
How can you be more selective of the information you consume?
It’s a challenge to discern good advice from bad advice, to know which details are worth looking into and which are useless and irrelevant. We’ve heard about selective hearing, but can we also apply that to times we consume and process information?
Think about this example. A large billboard tells you a certain credit card gives you 8% cash back. Great! But the fine print at the bottom informs you, that you have to activate the category by calling a number, the cashback only applies during the weekend, after you spend at least RM 2,000 per month on the card, is only given when you shop at certain suppliers and the maximum cashback given cannot exceed RM10 per month. Too much information! Your brain cannot handle it and what will you end up remembering? The 8% cashback, even though your actual cashback will be much lower.
Here are some tips to help you avoid information overload, especially when making financial decisions:
- Know the basics. Find an information source (such as CompareHero.my for credit cards, personal loans and broadband) that has summarised the information for you.
- Stick to your needs. Realise that the seller is trying to confuse you, so make a decision based on your financial budget and needs. Not because the offer seems too good to pass but it isn’t what you need.
- Take your time. Resist the urge to make decisions when you feel overwhelmed by information and delay the decision if possible.
- But also take action. At the same time, don’t fall prey to ‘analysis paralysis’ whereby too much information causes you NOT to act. Don’t delay the decision after you have the basics of what you need to know.
- Read the fine print. Take the time to reread and digest all information when it is a large purchase or decision.
- Free your head and focus on one thing at a time. Especially if the decision is going to make an impact on your daily finances. Give yourself the time to mull it over, and remove distractions from your mind.
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