Financial rules of thumb: a review of the evidence and its implications

Whittle, R ORCID: https://orcid.org/0000-0002-1866-0053, Duxbury, D, Werner, K and Simister, J ORCID: https://orcid.org/0000-0001-6304-309X (2017) Financial rules of thumb: a review of the evidence and its implications. Other. Money Advice Service.

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Abstract

Cognitive biases are difficult to avoid and emotions are difficult to ignore. They can lead to erroneous decision-making in general and this can be particularly costly when it comes to financial decisions. The busy lives we lead and the plethora of financial products available to us only combine to make decision-making ever more difficult, with precious little time for alternatives to be evaluated and fully-informed, optimal decisions to be made. Financial rules of thumb can help us to avoid some cognitive biases, dampen emotions and allow decisions to be made even in complex scenarios and when time is scarce.