Laura Rowley Money & Happiness

Resolutions require self-regulation. That's the ability to restrain impulses that tempt us to choose immediate gratification -- chocolate, cigarettes, buying on credit, scornful wisecracks about football's insignificance in the larger scheme of things -- over longer-term goals, such as good health, financial well-being, and stronger interpersonal relationships.

But unless we understand the dynamics of self-control, we're destined to fail, according to Dr. Roy Baumeister, a social psychologist at Florida State University. Baumeister, author of numerous books, studies how people resist temptation, break bad habits, and perform up to their potential -- or why they often fail to do so.

"Self-regulation mainly involves four factors," he explains. "Controlling thoughts; controlling emotions; impulse control, or restraining desire; and performance control -- enabling yourself to persist when you feel like quitting."

If you want to change your financial habits, the first step is to recognize that you're never a helpless victim of your impulses, Baumeister says. The irresistible desire to buy something doesn't rank with the urge to breathe or sleep.

The Three Ingredients of Change

Once you acknowledge your power to change, making it happen requires three ingredients: Standards, a monitoring process, and the internal strength to alter your behavior, Baumeister says.

Standards are the goals and ideals that define the desired response -- for example, a specific resolution to reduce debt. Be precise: Don't just vow to get out of debt; instead say: "I will pay at least $200 toward my credit-card balance each month and be rid of my debt in 12 months."

"Uncertain or conflicting goals undermine the basis for self-control and make people more susceptible," Baumeister notes.

Monitoring is simply keeping track of your behavior. When it comes to money, we need to track every penny we spend and do the math. As Baumeister suggests, many people buy on credit at high interest rates not because they're genuinely willing to pay an absurdly inflated price for an item, but because they never bother to calculate how much it actually costs them. When we lose track, self-control breaks down.

The third ingredient is the capacity to change -- to muster up the energy required to accomplish your goal. This, of course, is the toughest part. Why is it so hard to maintain our resolutions? One crucial reason is that will power "is a muscle that gets exhausted," Baumeister says. "Performing any act of self-control seems to deplete some crucial resource within the self."

When Your Will Power Is Weakest

Baumeister tested this hypothesis in different studies in which participants had to regulate their behavior -- watching an upsetting film without showing their emotions; or eating radishes and resisting chocolates and cookies. A control group did not have to restrain their actions.

Researchers then measured self-regulation of both groups in other tasks: Refraining from laughing while watching a comedy on video, or persisting in anagram puzzles (which were actually unsolvable). Self-regulation was weakest among people who had already performed a prior act of self-control.

In other words, we only have so much will power -- so successfully achieving three or four New Year's resolutions at once is virtually impossible. The well-intentioned person trying to run each morning, limit cigarettes, and act more kindly toward their spouse may also be the one most likely to find themselves in the mall blowing a wad of cash.

Baumeister has also found that our will power dissolves when we're emotionally upset, or have to make multiple decisions. "Toward the end of a long day at the mall or even a long trip to the grocery store, many small decisions along the way will have depleted the person's resources, and so self-control will be weakened, while behavior (including buying) will be more impulsive," he explains.

Recharging Your Resolutions

The implications for people making a money resolution in the New Year are clear:

• Make it your only resolution.
• Write down your financial goal, with a specific plan for how you will achieve it. Post your goal where you will see it often.
• If your goal involves multiple decisions, such as enrolling in a 401(k) plan, break the process into small steps and commit to one step each week, making it a "To Do" on your calendar, with a deadline.
• Monitor your goal: Write down every penny you spend for at least 30 days, noting what you bought, to get a visceral feel for where the money is going. (Do this even if you use debit or credit cards; or just commit to paying for purchases in cash for a month.) If you're paying down debt, chart your progress in a graphic way.
• Limit your decision-making by automating your behavior. Have money for retirement, education, debt repayments, or other goals automatically withdrawn from your paycheck or checking account on a monthly basis. If you're tempted by the delicacies at your grocery store, consider using a service such as peapod.com to buy the same basic items every week. While you'll pay a delivery fee, you may avoid overspending on unnecessary indulgences. When you have lunch outside the office, lock your wallet in your desk and take only enough money for food.
• Remove emotion from the equation. Don't engage in retail therapy. When you feel bad, take a brisk walk, listen to a favorite CD, or call a sympathetic friend.

Here's the good news: Will power is like a muscle -- although it can be depleted in the short term, it's actually strengthened through regular exercise over the long term, Baumeister says. That offers plenty of hope for people seeking to change their financial lives. So go for it. And go Giants.