Campus Queries: How can we stick to our financial New Year’s resolutions?

Fifty percent of New Year’s resolutions fail by February, according to a study by Statistic Brain Research Institute. The Daily Bruin spoke with researchers at UCLA to find research-based ways to stick to your New Year’s resolutions.

“(Make) better financial goals” is the third most common New Year’s resolution in the United States, yet less than half of those who set this goal end up fulfilling it, according to the study. Hal Hershfield, an assistant professor of marketing at the UCLA Anderson School of Management, said those who fail to meet this goal might struggle to negotiate between their present and future selves.

Making good financial decisions requires people to think about the needs and wants of their future selves. However, many people treat their future selves as strangers, people they don’t feel connected to and don’t need to sacrifice for, Hershfield said.

This disconnect between the present and future self might be rooted in the brain, according to a 2008 study Hershfield authored. MRI scans have shown brain activity differs when people think about themselves and when they think about others. However, when participants were told to think about their future selves, many of their brain scans looked like they were thinking about an entirely different person.

“(Your future self) could be like your roommate who you feel a lot of connection to and you want to make a sacrifice for, or they could be like the weird guy in your dorm who stands around while everyone is talking and doesn’t participate – just not that important to you,” he said.

Hershfield added when most people make financial decisions, they disregard how the decision will make them feel in the future.

“Most people don’t understand there is a future self that you need to start taking seriously,” he said. “You really need to start considering what (their) feelings will be.”

There might be a way to mend the relationship between individuals’ present and future selves. Hershfield recommends people write letters to themselves, or list qualities about their future selves, such as what activities they will do and what will be important to them.

“These are all techniques that help make your future self more vivid, more emotionally real,” he said. “Because of this, you’ll be more inclined to make decisions that will benefit you in the future.”

If an individual is still unable to make financial choices that will benefit their future self, Hershfield recommends removing choice all together. He said automatic saving accounts, which can move a certain amount of money each month from checking to savings accounts, are a good way to do so.

“Any time I automate something, it makes it that much easier for me to just do it and that much harder for me to prioritize today over tomorrow,” Hershfield said.

Hershfield added he thinks making saving money a habit is a good resolution for college students.

“No one expects college students to save for retirement, but the earlier you make it an automatic thing to contribute to a savings account, the easier it is to start doing that when you’re bringing in an income,” he said.