When logic is scarce…
There are actually good reasons why when we hurry we tend to make financial decisions that may not be the best.
Research suggests our ability to concentrate may be impaired due to “scarcity”, a cognitive deficiency explained in this eZonomics article.
The concept of scarcity centres on what happens when people do not have enough of something. Time – being in a hurry – can be scarce. Not having enough of something – whether it is time, money or even food – can dominate our behaviour and reduce our “mental bandwidth” – the capacity to think clearly and optimally. This is why we may sit on important decisions and only act, ludicrously, when the window for making a smart move has almost slammed shut.
As this paper illustrates, the poor suffer even more when facing issues of scarcity. The demands of juggling meagre budgets mean they have less capacity to deal with other issues, such as a shortage of time adding to their challenge.
Down we go: following the herd
Making a financial decision in a hurry may also increase your tendency to follow the herd. Investors often buy what others buy and sell what others sell, irrespective of whether it is financially shrewd. If you rush a decision, you may be more prone to copy other investors, even if their behaviour (with the benefit of reflection) appears reckless.
Make the time, then take your time
Whatever your situation, it’s good to be aware of the cost of procrastination. Cut procrastination by getting into the habit of prioritising tricky tasks (this app could help). Leaving them to the last minute can be costly: prioritise them by setting aside time to research competing opportunities, assess potential risks and rewards, and review whether a decision is right for your circumstances.