I’ve written extensively about taking control of your finances. One aspect of the ability to succeed with your financial goals is making active, thoughtful decisions pertaining to your use of money. Uptal Dholakia is a professor of management at Rice University in Houston, and he is currently conducting research pertaining to self-control and decision making as they pertain to personal finance as well as other personal issues.

I’ve always been excited to participate in academic research; I was a frequent subject for Princeton University’s cognitive psychology department when I was much younger, and I continued through college by participating in occasional research studies conducted by graduate students at my own university. In fact, when I attended a psychology class my sophomore year and was considering the pursuit of a minor in psychology, participation in graduate research studies was mandatory. Regardless of the requirement, I enjoyed it.

Professor Dholakia is inviting Consumerism Commentary readers to participate in this study. In order to participate, all that is required is to answer questions on a web-based survey.

I completed the survey last night, and it took less than ten minutes to complete. The questions were not difficult, but they did make me think about my decision-making process and how I allow myself to succumb to impulse decisions. There are some questions about demographics at the end of the survey, but the information will be held confidential and reported only in aggregate.

The professor has agreed to share the results of the research with Consumerism Commentary, so once the analysis is complete, you can expect an article discussing the findings published here.

Please help further research regarding the psychology of personal finance by completing the survey here. No electrodes need to be connected to your body and you won’t need to receive any electric shocks.

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Many people begin a new year with goals, resolutions and targets that define what they’d like to change within the next 365 days (or 366 days in a leap year). While most people fail to achieve these goals and resolutions, just the process of making resolutions and the self-reflection required can be helpful towards improving a life.

The ability to make and achieve goals relies on the belief that one can control an outcome, in this case an improvement in one’s life, by changing behavior or attitudes. One reason resolutions fail is that some are no entirely convinced they have control.

There is a tendency in American culture, due its focus on the strength of the individual over the strength of a community, for people to take credit for success but look for external causes for failure. This tendency is apparent even in the choice of words; in the previous paragraph, I wrote “resolutions fail” rather than “people fail at achieving resolutions” without thinking about the possible causes. There are other examples:

• Good performance in a portfolio is due to the investor’s own stock choices while bad performance is caused by market forces or the failure of a system.
• A promotion at work is due to one’s own hard work and accomplishment while a lack of reward or being laid off is the result of having a bad boss or the economy.
• A business’s success may be caused by the owner’s or CEO’s strategies, while a business’s failure would be the result of a competitor’s tactics.

Over the last decade, I’ve come to increasingly realize that I have more control over my life. My actions and choices — and sometimes, lack of choices — have a bigger effect on the outcome of my life than external factors. I haven’t quite fully accepted this in all aspects of life, but I’m getting there. With the knowledge that I am in control, there are certain ways I can exercise this control to affect the way my life moves forward.

Making active decisions. There was a time I avoided decision-making, particularly regarding important changes in my life, as long as possible. There are some decisions that can difficult due to the way a choice will affect the rest of one’s life, and like many people, I often preferred to ignore the need to make a decision in the hopes that someone else — or society itself — would make that decision for me. This is a great way to cede control of my life. Yet, I would still be responsible for the outcome because not deciding is a choice. It’s just a cowardly choice.

Impermanence. I often remind myself that life is short, and that is an idea that keeps me afraid to make mistakes with my big life decisions. I don’t want to make a decision and later discover that two decades or more of my life were wasted on an ultimately unsatisfying path. One way I can motivate myself to make decisions is to remember that almost every choice is not permanent, and I can change my mind most of the time.

Being able to change your mind and find a new path is a great benefit of life. Without some flexibility, it would be impossible for young people to choose life-long goals. Inevitably, external factors do influence our lives, and the ability to react and change course if necessary is key for maintaining control.

Accepting what is beyond control. I can’t control other people’s actions, but I can control how I react to them. I have no control over terrorist attacks, acts of nature like hurricane Katrina, or the day-to-day swings of the stock market. The best I can do is reasonably limit myself to potential exposure. I can prepare for the worst without sacrificing my needs for today and the future.

Being positive, friendly, and happy. While I wouldn’t want to be that annoying friend who is perpetually in a great mood, it is empowering to be able to remain positive in bad circumstances. Having a generally kind disposition can encourage others to be kind as well, though it can also encourage others to try to take advantage of your good nature. Find balance between kindness and strength to keep bullies at bay (adults can be bullies, too — not just kids). Choosing happiness allows you to survive and thrive in tough times and emerge a better person.

The points above are all aspects of life I try to remind myself in an effort to move my life in the right direction. It can be a struggle to accept blame and avoid frustration with the world. It’s still a struggle for me to make important decisions with my life. But these are all aspects of my life I’ve improved over the last decade, and this shift in personal philosophy has helped me arrive at the point of my life where I am now — a state where I feel generally successful and happy.

Photo: Ciaran McGuiggan

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As the year draws to a close, I plan to take some time to evaluate the progression of my life, including my finances, against my goals and resolutions for 2011. I reached some goals while missing others. There are many reasons people don’t keep new year’s resolutions, and I’m not any different.

In one recent survey, only 15 percent of those who made resolutions have kept them. Other studies have presented even more startling numbers, claiming a resolution success rate of only 8 percent. I even found one researcher claiming only 3 percent of resolutions survive the first month of the year. The statistics get even worse for people who follow self-help advice promising to improve resolution-keeping through visualization (for example, hanging a pair of jeans you’d like to fit on your door or keeping a photograph of a vacation spot you’d like to afford on your dresser) or through sheer willpower.

Furthermore, only about half of all Americans even bother to make new year’s resolutions. Given the negative media surrounding failure, with a word like “doomed” making prominent appearances, that makes sense. Why spend the time thinking about how to improve your life if chances are good you’ll fail?

Beating the odds and succeeding at keeping your new year’s resolutions comes down to setting the right goals from the beginning, focusing on fewer aspects of your life, and not using the new year as a one-night stand for resolutions. The failure rate doesn’t concern me, though; I’m more concerned with the half of the population that doesn’t take the time to look at how they can improve their lives and the world around them. It’s unacceptable to me that the fear of failure is preventing people from thinking about the future.

“The unexamined life is not worth living,” according to a popular translation of Socrates. A tortured philosopher’s nearly-final words from the textbooks of history are relevant today. (According to Plato, Socrates’ last words were, “Crito, I owe a cock to Asclepius; will you remember to pay the debt?” Those words could inspire a different discussion about personal finances.) The end of one year and the start of another is a convenient time to self-reflect. Did you live your life according to your values and pursue the things that inspire you? Is the world a better place after 365 days?

These questions go beyond goals and resolutions, but they can inspire both as well as a renewed dedication to living your life a certain way in the new year and beyond. Set some goals and resolutions, not just the typical positive changes like paying off debt, losing weight, and quitting smoking, but others that are tied more to who you are. That might even include some goals that can’t be measured. That goes against typical goal-setting advice, but with new year’s resolutions, it doesn’t have to be a matter of reaching your goal or failing. Just the process of thinking — and if you’re so inclined, writing down — your thoughts about the ideal “you” can improve your life and the lives of those around you.

The root of making resolutions that stick is looking deep into your own life to determine who you are at your core, and if that person is approaching the person you’d like to be. No resolution can be successful, or for that success to matter, without being that meaningful. The end of one year and the start of the next is a good time to begin this process, but don’t set self-reflection aside for just the one day.

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