Tips | October 8, 2013

Six ways “doing nothing” can harm finances

Sticking with what you know is often easy but is it in your best interests?

Set in our ways, it’s tempting to stick with certain spending, saving and investment habits even when incomes rise (or fall) or other factors change.


As an earlier eZonomics article shows, in some circumstances inertia – that force that makes us resist change or be prone to do nothing – can work in our favour.
But inertia is a double-edged sword. It can be used as an excuse to do nothing when action is required.

Beware of inertia when:

1. Your environment changes but you don’t If interest rates fall, it might make sense to pay back debt more quickly. But the vast majority of Europeans who find it easy to pay their mortgage are not paying it back sooner, the ING International Survey on Homes and Mortgages 2013 found. Some of the 84% who fell into this category might have a good reason for not making the most of low rates, but many others might simply be sticking with what they have always done and be missing an opportunity.

2. You have harmful habits it pays to break It’s payday so – naturally – it’s time to splash out on an expensive meal and new gadget. As seductive as this habit is, a healthier financial future might be built by breaking the payday spending habit and cultivating a payday savings habit.

3. It’s been years since you reassessed long-term savings If people marry, their income changes, they have children or get closer to retirement, how much financial risk they are willing to take could well change. And their mix of investments might need to change, too. Inertia, procrastination and other tendencies can lead some people to put off these important reassessments and readjustments. Prompts such as timelines, to-do lists and hiring a professional adviser might help.

4. You haven’t updated your memberships Does a magazine you subscribe to lie unread every month? What about fees for a sports club that you no longer use? Review direct debits and standing orders regularly to assess ones still needed – and those you can do without.

5. The default is wrong for you Your mobile phone plan, your gas tariff, your investment profile – these are often set to the default option. But if the default is not the best for your individual circumstances, it could end up costing more. Spending time to finding the specific plan that suits your situation can be a better idea.

6. You regularly raid your “savings” We feel pleased when we regularly put money into savings. But if we often raid the fund, it can be a case of one step forward, two steps back. Try to take an objective look at finances if you’re dipping in to long-term savings to pay for birthdays, meals out, anniversaries and other special occasions and add a “special events” line into your household budget.

eZonomics team
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SavingBiasPeer effectsProcrastination

This article is related to the ING International Survey:

Homes and Mortgages 2013

Homes and Mortgages 2013

September 18, 2013

Living in a “dream home” is important for most people in Europe. So do they think the price will rise and are they willing to move away to get it? The second annual ING International Survey on Homes and Mortgages...

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