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Haste Makes Waste: Why Hasty Financial Decisions Lead to Regrets
Haste Makes Waste: Why Hasty Financial Decisions Lead to Regrets
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Money Psychology

Haste Makes Waste: Why Hasty Financial Decisions Lead to Regrets

Money254 Team
February 9, 2022

Have you ever been in a situation where you feel you need to make a financial decision RIGHT NOW?

Many life events present us with situations that put us under pressure to act immediately. And life is indeed about choices, especially financial ones. Our circumstances will often be a reflection of the financial decisions we make, good or bad.

Take the decision to quit a job, something that many have or will have to contend with at some point, for example. There is John who has been meticulously creating an exit plan, building up an emergency fund, learning a much-needed skill, aggressively applying for jobs and networking, and sharpening his negotiation skills to get the ideal salary to make his job change sensible.

And then there is Joe, who justifiably feels overburdened by a thankless employer, has been pulling the weight of the team he leads, and is plain tired of a job he now resents. A highly-skilled Joe banks on his credentials to land a new job, or start his own consultancy firm after taking a break from employment, maybe work part-time gigs moving forward, either way, he just wants to quit, right now - the pandemic notwithstanding. Kesi baadae. 

It may not be exactly easy to tell who will have a successful transition given intervening variables such as luck. But it is agreeable that in the run-up to quitting work, John stands a better chance based on his preparation. 

When I was buying my first car, I drove myself into a really tricky situation. Having quite postponed this decision for over a year, the moment I saw a decently-priced car online I was sure I needed to ‘snap up’ that deal before someone beat me to it. 

Within three quick days, I had the logbook in my hands; not much pre-inspection happened on my part, nor did I have time to find a mechanic who would have actually given me the armour to negotiate for a much better deal. I needed that car now, and the instant gratification was amazing! 

Little did I know I was setting myself up for monthly trips to the mechanic that would drain my wallet and well, make me truly appreciate the need to plan, budget for and question my decisions before settling on a course of action. 

Haste Makes Waste 

The plans of the diligent lead to profit as surely as haste leads to poverty — Proverbs 21:5

Nothing sums up the consequences of haste as this Bible verse. It is as brutally honest as financial advice can get. And while there's always an exception to the rule, science is particularly on the side of this rule. 

A 2012 study by researchers at Vanderbilt University found that the brain switches into a special mode when forced to make quick decisions. 

The study supported previous studies on the basic model of making decisions. That the brain uses the same system to make both quick and deliberate decisions. 

As such, if the brain is to shorten the decision-making time, then it simply reduces the total amount of neural activity it would normally require to make a decision. 

Now that the brain is making a decision using less information than it would normally have, the likelihood to make a mistake increases. 

You can liken this to the simple act of crossing the road - Look Right, Left and Right Again before crossing - that is ideally the safe way of deciding if it is safe to cross. Ignoring this and say, you keep look forward, or only right, etc. reduces the chances of a safe crossing. 

Speed-accuracy Trade-off

Now, one of the common reasons someone may use to justify a hasty decision is that, given the situation, the need to act swiftly is more important than acting accurately.  

That is the speed-accuracy trade-off - where either speed or accuracy is sacrificed in order to prioritise the other as the situation demands. 

Here are some examples;

Jeffrey Schall, Ingram Professor of Neuroscience, who was part of the Vanderbilt study, gives a situation where one has to decide whether to shut or not shut down a nuclear reactor in the face of a potential meltdown - haste is seen as the preferred option. 

What about crossing Mombasa Road on a busy afternoon? Do you follow the protocol and cross when you are sure the road is clear or jump at the first opportunity because you are running late?

And then, let’s look at the basketball player whose intent is to dunk the basketball. He sprints across the pitch towards the basket, but as he approaches, speed is now traded for accuracy to make sure he can be composed and come as close as possible to making the basket. 

So does haste ultimately lead to waste? No, not exactly - there are indeed situations that call for haste. And there is also deliberation taken too far which then can be equated to procrastination

When making decisions, the balance is often between the need to arrive at a decision within the reasonable time required to make that decision accurate and hence beneficial. 

What Causes People to Make Hasty Financial Decisions?

It is reasonable to think that no one really wants to make a decision that is not well-thought-out. 

And definitely, everyone wants favourable outcomes of their decisions. Nevertheless, many still make hasty decisions about their finances that have negative consequences. 

Some of the inherent reasons that lead to hasty financial decisions include

1. Emotions

Money and emotions are inextricably linked given that humans are emotional beings. And we can’t just help it. Emotions can enable us to make brilliant financial decisions and so can they get us into the path towards financial ruin. 

Greed and fear are known to trigger bad financial decisions. Anger, shame, and guilt too can circumvent our decision-making processes that we may take less time to evaluate the financial value of the decision to just get done with it.

Learn More: How Fear, Guilt, Shame and Envy Affect Your Financial Goals

2. Financial Fatigue

Day-to-day financial challenges can deplete our psychological resources responsible for logical decision-making. 

If you are in debt, have suffered successive financial setbacks, have struggled with indecision due to low financial literacy, or are generally distracted due to ongoing challenges, you are likely to make a bad financial decision - especially a hasty one. 

Understanding how your current financial situation may affect your decision-making is a good starting point in preventing that from digging you deeper into a financial crisis. 

3. Lack of Self-control

In the quest to build wealth and financial security, intelligence will often come second to self-control. 

The ability to delay instant gratification is far more valuable than the knowledge you may have of making money. This is because the need to fuel that ‘feel-good’ satisfaction of impulse purchasing could completely wipe out gains made from diligent saving and investing. 

Read On: Bad Spending Habits That Are Making You Poor: How to Break the Cycle

4. Poor Financial Literacy

To be truly in control of your finances, you have to be capable of making decisions confidently. And how can you do that if you are not knowledgeable about whatever you are trying to make a decision about?

How likely is it that you could be swaying into buying a plot of land in area X because your friends are doing it and say it is a great idea? And for that matter, how likely are you to be influenced by other people’s opinions about a money issue?

Financial literacy starts with things as simple as knowing when and how to draw a budget, how to keep track of your expenses and basic life skills as a financial self-audit. 

  • Do you understand various risks and rewards that come with different investment types? 
  • How well do you understand the effect of inflation on longer-term investments? 
  • Do you know compound interest can work for or against you depending on which side of the equation you are? 
  • Are you able to fully appreciate the cost of acquiring credit and make a conscious decision? 

5. Biases

Remember the first car story I earlier told? I was so invested in the idea of owning a car that no one could have convinced me otherwise. 

If you are convinced that land and real estate or cryptocurrency etc. is the best investment type for you, you might find yourself making not-so-wise decisions when confronted with a ‘glittering’ opportunity. 

Bias becomes especially a problem when you actively seek information that supports your view to convince yourself you are making the right decision even if there are red flags. 


Life is all about decisions, and the financial ones seem to be the most important to our overall well-being. If you then choose to rush into making these kinds of decisions, you are likely to get yourself in trouble. 

Failing to seek advice or get a second opinion is part of the hasty decision-making trap on top of inherent biases and impatience. But so can be information overload, especially when one is not highly financially literate.

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