Britain ‘heading for crisis' as cash-strapped families put off big decisions
British families are failing to plan ahead for life's big decisions, such as getting married, changing jobs or having more children, according to a new report by global insurer Zurich.
In today's uncertain economic climate, most Brits are choosing to keep their options open or focusing on day-to-day decisions, like how much to spend on the weekly food shop or whether they can afford to turn on the heating.
But with higher education becoming more expensive, the competition for jobs fiercer than ever, and pension pots shrinking, this ‘here-and-now' thinking could be costly in the long-term.
It appears that our individual economic resilience as well as the wider economic climate affects how we make decisions. The richer we feel, the more comfortable we feel planning for our future, according to Professor Michael Hulme's findings in the Zurich Big Decisions report.
29% of those in higher social groups say they plan for the long-term future, compared with 19% of those in lower social groups, when asked to describe their attitude to making big decisions;
Those in lower social groups (22%) are twice as likely as those in higher social groups (11%) to say they make decisions to help them get by on a day to day basis, when describing their attitude towards making big decisions.
The report's author, Michael Hulme, Honorary Professor at Lancaster University and a specialist in decision research, said: "Britain's attitude to planning has been shortened by the recession. To cope with economic uncertainty Britain's families are reining in their horizons and delaying the big decisions about their lives. But this outlook is unsustainable. If we don't feel confident about investing in our future - be it through education, the property ladder or security for our old age - society as we know it is heading for breakdown.
"If this short-term decision making carries on, 10 years from now we might be facing decision-paralysis. We will be making so many short term decisions, so often, that we are unable to cope with the surprises life throws at us. It's time to start being honest about which choices are trivial, and which are life-changing, and plan accordingly. And not only thinking about the next few days or years, but what affect those decisions will have over a lifetime."
Zurich Big Decisions warns that Brits today are making life-changing decisions without considering the long-term consequences. 45% consider the impact their big decisions will have over the next year or less. Only one in ten (10%) think about the life-long impact. A further 9% only consider the immediate impact - not thinking any further ahead than the end of the week.
A surprisingly large proportion of Britons also have a short-sighted approach to what they perceive as ‘long-term'. Around one in twenty (6%) define the ‘long-term' future as less than one year when making big decisions. The majority (73%) define ‘long term' as up to 10 years. Only one in 20 (6%) consider ‘long-term' to be 20 years or more when making big decisions.
Kay Martin, UK Chief Marketing Officer at Zurich, said: "Given that household budgets are being squeezed from every angle it's not surprising our attention has turned to getting by over the next week or month. But this ‘cope and hope' approach to life's big decisions could be a false economy, with short-term scrimping potentially meaning losing out in the long-term.
"It seems that attitudes to life planning - and indeed financial planning - are changing. But whatever the financial situation and outlook, the act of analysing all our options and looking to sources of advice can help play an important part in getting back that feeling of control, and a sense of having acted responsibly.
Zurich's advice for families making ‘Big Decisions':
Plan ahead: many people take decisions by relying on their habits and routines. But planning ahead and prioritising life's big decisions can help you and your family make informed and risk-based choices. There are some decisions you know you might need to make in the future - about your home, your children, or your career - and looking beyond your day-to-day challenges can help you deal with those bigger choices when they come around.
Seek advice: most of us find advice from partners (94%) and friends (81%) influential when making life-changing decisions. It's important to use a wide range of sources to help you make your mind up - financial advisers, on-line money experts, comparison websites, and even your workplace are all potential sources of advice which could help you in making the right decision.
Don't delay: the ‘Big Decisions' survey shows that austerity can force us to reign in our horizons, but there is a risk that prolonged economic uncertainty will lead to more families delaying tough choices. Pushing-back big decisions to a later date can seem like the easy option when times are tough, but being prepared can make a big difference to our resilience to unexpected financial and personal events.