Get into better money habits for the new tax year

48% of Police haven’t moved savings or investments for at least two years

Despite endless recommendations to check you are getting the best rate for your savings and investments, 48% of members of the Police family admit that they have not moved their savings or investments in the past two years. Even more shockingly, 28% have never moved their money to get a better rate or return; 11% have not moved their money in the last year; and 12% confess they can’t remember.

With the end of the 2016-17 tax year approaching on 5 April, Police Mutual asked Professor Richard Crisp, Director of the Behavioural Science Laboratory at Aston University, to look at these statistics to see what can be learned in order to help savers and investors make the most of their savings and investments. He says, “first take a look at your behavioural traits by considering the question: would I prefer £10,000 in 10 years from now or £1,000 today?”

Of those asked 58% - the bide my time for a bigger return-ers - opted for £10,000 in 10 years stating:

  • Under today’s savings/investment rates I can’t see £1,000 turning into £10,000 in 10 years

  • I’m due to retire in 10 years, have sufficient income to manage day-to-day for now

  • £10k is more than £1k!

But a sizeable 42% of instant gratification seekers wanted the £1,000 today for the following reasons:

  • I have immediate needs for the money and might get run over by a bus in the meantime

  • Because I’m skint!!!!

  • Aged 65, I might not be alive in 10 years!

Crisp explains this: “The status quo bias can be explained by a core characteristic of the human mind, and in particular how we make decisions about the future. In essence, how things currently are is already ingrained in our consciousness, so everything about it is familiar and comforting. In contrast, the future is unknown and so thinking about it is more difficult and lacking in detail. This naturally makes us feel less confident. It is this key difference between how thinking about the present versus the future feels that can explain why so many people would rather have a smaller pay out now, than wait to receive a larger pay out in the future.”

To overcome your status quo bias, your next step is to identify your financial tribe:

94% of those surveyed have savings or investments compared to 65% of the total UK population[1">, with 39% having more than £10,000 saved or invested. This suggests that large sways of the Police family invest more in their future than the general population, making them sensible savers.

However a surprisingly high 19% say that they are not currently saving every month. Crisp says, “This data suggests the status quo bias may also be at work when people are making financial decisions about their future.”

Here are four tips for how to combat the status quo bias:

  1. Admit to yourself that you are not following the best practice of shopping around and moving your money accordingly

  2. Figure out what your ‘barriers’ to taking this step are, so that you can break them

  3. Imagine the small steps needed to reach the goal, rather than thinking of the overall change that we are making

  4. Build a clear and detailed ‘cognitive plan of action’ including detail around the small steps required such as the regularity that you want to check your rates, then diarise them

“Just like regular exercise and physical wellbeing, applying this process to financial decisions can help us consider all the options, and then give us the confidence, and ability, to follow through on our plans. Those who are able to break the status quo bias and look at their finances at least once a year will help ensure that their finances work as hard as possible for them in the coming year,” concludes Crisp.

Call Police Mutual on 0800 652 8986 for more information on Police Mutual’s savings and investment products or see


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