3.1 The preference for bringing forward financial rewards and for delaying outlays
Evidence suggests that, given a choice, around a fifth of us would prefer to accept less money now as opposed to more money later. This was shown in a survey by the Money Advice Service (), which found that one person in five would prefer to be given £200 today rather than £400 in four months’ time!
This preference also means that people prefer to delay payments rather than make them straight away. This behavioural trait to delay payments may lead to poor decision-making when paying for goods – for example, paying for car insurance in monthly payments over a year rather than in full at the point of purchase. If you pay in instalments over a year you are entering into a loan arrangement with the insurance provider. Given that the interest rate charged is commonly very high, choosing to pay in this way is usually a poor financial decision.