What about Jan. 1 spurs people to make sweeping declarations about how their lives will be different in the year to come? Couldn’t we just as easily decide to lose weight and stop smoking on Dec. 31, March 7, or really any other day you’d care to throw out there? Anyway, what’s the point; doesn’t everyone go back on their declarations by spring?
Those are actually some pretty important questions, considering that many of the most common New Year’s resolutions are financial in nature and most of us would be well served to tweak a thing or two in terms of how we manage money. I mean, our risky borrowing habits and chronic overleveraging did help lead to one of the worst recessions in history, and we’ve spent the past few years racking up credit card debt in record numbers despite the economic recovery. If Card Hub’s ultimate projections for 2012 hold true, U.S. consumers will have incurred nearly $90 billion in credit card debt since the beginning of 2009, including more than $40 billion in the fourth quarter of 2012 alone.
Given the clear need to make meaningful financial changes this year, we at Card Hub looked into the history and psychology behind New Year’s resolutions and sought a few tips from some of the foremost experts on human behavior. Here’s what we found:
Why do we make resolutions?
The New Year’s resolution phenomenon is largely a social construct, but that’s certainly not to say our intended changes are arbitrary. No, experts and common sense agree that we make resolutions because there’s something about the way we live our lives that we’d like to change. Typically these changes have to do with self-regulation.
“New Year’s resolutions are often relevant to self-control problems. ‘I’d like to save more, I’d like to lose weight’ – these are problems where the person is at war with him or herself,” says Dr. Don Moore, who is the Barbara and Gerson Bakar Faculty Fellow for the Management of Organizations Group at the University of California Berkeley’s Haas School of Business. Dr. Moore’s research focuses on overconfidence as it relates to decision-making, negotiation, and ethical choice, and he previously served as director of the Center for Behavioral Decision Research at Carnegie Mellon University. “There are different parts of the self that desire different things. There’s the part that desires to be slim and fit, and then there’s the part that desires to eat chocolate cake and candy. … New Year’s resolutions are interesting because they usually take the perspective of the long-term, virtuous self and attempt to subjugate the immediate, impulsive self that wants to sleep or wants the yummy treats or wants to spend the money.”
Ok, so we’re in the midst of this ongoing struggle within ourselves, and New Year’s resolutions are a manifestation of the “good” side winning out (at least for a little while). Got it.
Why Jan. 1?
“The reason we start with the New Year is because of just what that notion means – the image of old Father Time and the New Year’s Baby. It’s a time of rebirth, a time of something new,” says Dr. Joseph A. Ferrari, who is a professor of psychology at DePaul University and author of the book Still Procrastinating? The No-Regrets Guide to Getting It Done. “Life is a cycle of stops and gos, and dying and rebirth.”
Indeed, January 1 is a natural choice for “new beginnings,” not only because of the symbolism related to modern New Year’s celebrations, but also due to the fact that it’s marked the start of the year since Roman times. (Before then, the Babylonians celebrated in March, but that’s so 4,000 years ago.) January is also named for Janus – the two-faced Roman god who simultaneously looked back to the past and forward to the future – so there’s some history there in terms of evaluating past performance in order to make future improvements. Throughout time, different societies have incorporated varying degrees of contemplative introspection into their New Year’s celebrations, and it’s clearly become a social custom.
“What it represents, culturally and socially, is a period of renewal – it’s a ‘new year.’ So that’s why I think for many people it has been January, but for lots of people who have been students for a long time, September feels that way too,” Dr. Timothy A. Pychyl, a professor of psychology at Carleton University, said. “Both of those trigger this idea also of a new self – this notion of a future self that’s different than the self that we have now. So we often think of then specific resolutions because that’s been a tradition. I think in a very broad sense in Western culture the idea was well, you make a resolution around some behavior, but psychologically the bigger issue is that with the New Year comes a new self.”
In short, there is a reason why much of society has glommed onto January 1 as the time for new beginnings, but at the end of the day, it really depends on your perception of time. We all use particular landmarks to segment time, and whether yours happens to be the beginning of a new school year, a birthday, or the turn of the calendar, it marks a clear, natural time to hit the reset button.
Why not make changes right away?
The special events (like New Year’s) that partition our lives into easily understandable and consumable segments serve as natural points of inception for lifestyle changes. They give us a static point of reference, making it easy to gauge progress, and offer the comfort of knowing that many people before you have embarked down similar paths emanating from the same day. However, those aren’t the only reasons why we wait to implement necessary changes.
“There’s a lot of evidence that suggests that people as a rule have trouble dealing with their immediate impulses and that we aren’t very good at making rational decisions based on expected value. In the long view of the New Year, we sort of plan as if we had infinite self-control and resolve, Dr. Moore said. “It can feel good to imagine the virtuous future for ourselves, and when people do that they’re at the risk of being overconfident. … It is those who are most overconfident in their ability to behave virtuously despite the temptations who set these New Year’s resolutions.”
In other words, we basically allow our imaginations to run away with themselves. We give ourselves immediate gratification by planning long-term improvements and extend the effect by setting a future date for their implementation. As you might expect, procrastination also plays an important role here, both in terms of designating Jan. 1 as the jump-off point for change and, ultimately, keeping us from adhering to resolutions.
“[New Year’s resolutions are] inherently a cultural form of procrastination. You think, ‘ah, you know, I really should stop eating so much,’ or ‘I should quit smoking,’ or ‘I really gotta exercise more – I’ll make it a New Year’s resolution.’ Now, that’s a fascinating thing because it mirrors what we do day to day, moment to moment, but we do it because it’s culturally scripted. We love this. It excuses our delay,” Dr. Pychyl said. “We feel good right now because we’ve made this intention for the future that is a good thing – I’m going to eat better in the New Year. But we also feel really good right now because it doesn’t mean I have to do anything right now. I can continue to be the way I am. … So, all of the things that we know about procrastination as self-regulation failure, about that gap between an intention and action, just are playing themselves out perfectly with New Year’s resolutions because we are into this big self-deception.”
Are resolutions doomed from the start?
New Year’s resolutions aren’t necessarily bound to fail, but your chances of success obviously depend on why you’ve decided to wait for the turn of the calendar as well as how you approach the changes you’re attempting to make.
“People think in very global terms about the future. … They don’t take into account the obstacles that they might encounter on a daily basis in order to get there,” Dr. Ethan Kross, an assistant professor in the University of Michigan’s Department of Psychology, said. “People who make specific implementation intentions, people who think to themselves, ‘If I’m in this situation, I’m going to behave this way,’ those people are more successful in following through on their intentions than people who don’t develop those kinds of plans.”
So, the first thing you need to do is think in terms of specifics, rather than abstract ideas, and avoid trying to bite off more than you can realistically chew. Then, implement barriers to failure as well as incentives for success.
“Sometimes, people can lock themselves into resolutions by taking preemptive action. One of the most obvious mechanisms to do this has to do with alcohol consumption,” Dr. Moore said. “If you’re an alcoholic, you may resolve, ‘I’m going to get sober in the New Year.’ If you’re serious about that, you can take a drug called Antabuse, which induces violent nausea if you imbibe any alcohol. So, sometimes you can pre-commit like that to a course of action that eliminates the temptation.”
Sometimes, a good firm kick in the pants works wonders as well (and that goes for both you and the society that’s helped shape you).
“Stop the excuse making and do it. Start doing the tasks. Don’t wait until the last minute. There’s no reason to wait for the last minute,” Dr. Ferrari said, adding that the bigger problem is a culture that promotes procrastination. For example, he says certain post-Christmas sales are now offering discounts of 70-80%. “You know, we’re rewarding people who wait and shop as opposed to giving that 80% on Black Friday and then it getting less and less and less. And if you wait until Christmas Eve, you pay 20% more as a surcharge. A lot of people would stop procrastinating. A lot of people would have their Christmas shopping done six weeks earlier. … What we need to do is have a little bit of a culture shift, a mind shift as well. Stop thinking about waiting for the last minute, but instead get things done earlier.”
There are indeed a number of ways to set yourself up for resolution success, so you might want to experiment with some of the following tips recommended by our group of experts:
- Make your resolution a prerequisite for other activities: For example, if your desire to have a cold beer upon getting home from work prevents you from exercising, don’t put the beer in the fridge until you begin your workout.
- Get yourself some watchdogs: Tell friends about your resolutions, post them online, or make a joint resolution with a buddy. The desire to avoid disappointing people who you’re close with will force you to abide by your resolution, and your support system will let you know if you’re slipping.
- Gamble on yourself: Bet someone that you will achieve your resolution, and the monetary incentive will help keep you committed.
- Cut the excuses: You’re always going to be busy, so just stop putting things off and take care of tasks as they arise. You’ll definitely feel less stressed if you do.
- “Change” your perspective: Thinking of your resolution as something you need to “change” about yourself in order to cure an imperfection puts a negative slant on the whole process. Instead, reframe it as a way to make yourself even better than you are now by building on your strengths.
So, what did we learn here? Well, our experts obviously had a wealth of information to share, but the following are the most important things to keep in mind moving forward:
- New Year’s resolutions can be a product of self-deception and procrastination, so make sure yours come from the right place and are ultimately adhered to.
- Specific, realistic goals are the easiest to implement and adhere to.
- It’s important to establish some natural performance incentives and roadblocks to failure.
- Altering your behavior won’t be easy or pleasurable, so remain focused on the long-term benefit as opposed to immediate gratification
With all this in mind, take a look at the personal finance changes we’ve deemed most important for 2013, determine which apply to your situation, and develop an implementation strategy that maximizes your chances of success. Oh, and don’t forget to keep us apprised of your progress.
Happy New Year, may 2013 be prosperous for you and your family!