Knowing how to manage your money is essential – it keeps us from falling into financial difficulty and allows us to live happily and healthily, but did you know that making decisions about our cash can result in personal finance paralysis? Overthinking where and how you’re spending your money, whether you should take out a pay day loan or which mortgage deal is best for you can lead some of us into a cycle of not taking charge and can end up in us missing out on deals and incurring interest. If this sounds like you, read on to find out more!

What is personal finance paralysis?

Personal finance paralysis is an issue that many of us will come across in our lifetimes and more of us suffer from it than you think! It refers to a fear of making the wrong decision when it comes to your finances. For example, if you have debt, consolidating it can make it easier to pay so you can make a start on reducing it all together, but those that suffer from financial paralysis may put this decision off, and it could end up costing them. There are many reasons that some of us suffer from financial paralysis which we will look at in more detail below.

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What causes this?

Financial paralysis tends to happen because of something else, for example not knowing what to do, so just not doing anything – it is not something that takes place out of choice. Here are a few of the reasons that you may be experiencing this.

  • Feeling overwhelmed: Making decisions about your finances can be difficult, and many of us can overthink the choices we have and become overwhelmed. Feeling stressed about an upcoming decision can put you off dealing with your issues head-on, and not doing anything about it seems easier, but as above, this can be costly.
  • Not knowing what to choose: We all know what it’s like to feel confused when there is too much choice, and it’s no different when it comes to your finances – not knowing which the best way to turn to do what’s best for you can make your life even harder and can result in anxiety when it comes to choosing one option.
  • False assumptions: Many people think that not deciding or taking charge of their finances is better than making the wrong decision, but this is incorrect. Not managing your finances at all means that you are at risk of losing up to thousands a year.
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How can you avoid it?

Thankfully, if you are suffering from personal financial paralysis, all is not lost and there are a few things that you can do to help you make those all-important decisions for the better, from automation to getting to grips with your finances. Here are a few examples.


This is one of the best ways to handle your financial paralysis. Considering how much of your issue stems from not being able to make a decision, take the decision out of your own hands and automate it instead. If you are saving for the future, or an event, moving money into your savings pot each month is advantageous, but you are unlikely to remain consistent unless you automate this. Create a direct debit to your savings account and watch the money mount up, without you having to do anything!

Understand your finances

Creating a budget can help you to get to grips with your finances so that you can really focus on the ins and the outs, where your money is going and if you need to make changes. Getting used to handling your money allows you to get a better understanding of how it works for you and taking the time to make a budget means you can reduce spending in areas that don’t need it. It can help you to save money, become more financially stable, and help to improve personal finance paralysis.

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Get rid of perfection

No one is perfect, even when it comes to money, and putting too much pressure on yourself means you’re less likely to make a decision. You shouldn’t become wrapped up in the pennies – for example, if you need a new kitchen appliance and you’re spending hours comparing, thinking which is better value for money, and you still can’t decide – think about whether your decision is really important, is it going to have a massive impact in the long run? If not, a few pounds here and there isn’t going to make that much of a difference, but not buying it at all will!


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