Holiday promises: why they're more than just a wish list

The New Year and Christmas often feel like a clean slate, a new phase: an opportunity to reset old habits, "reset" failures and lay the foundation for future success. We make solemn promises to ourselves - commitments: to start running, to read more books or, especially important for investing, to finally strategize and increase our income.

These New Year's Resolutions become a powerful incentive and springboard, adding motivation and helping you set goals. But they can be a source of deep disappointment. Let's explore how this works with the help of cognitive psychology.

Psychologists have long studied how special, symbolic moments influence our behavior. Holidays, and especially New Year's Eve, act as a powerful Fresh Start Effect. Wharton School research shows that people are more likely to achieve goals after a significant time point, a milestone - the beginning of a new year, month, or birthday. This is also where our favorite "I'm going on a diet starting Monday" or "I'm going running starting the new week" come from.

These points in time are often associated with rituals. The latter signify an order of actions that necessarily have a symbolic meaning. In the case of Christmas and New Year's Eve, these include the Christmas tree, champagne, presents, and a festive dinner. Even the New Year's toast is part of the ritual. At the same time, it itself emphasizes the importance of the moment. They are also called nodal moments, and they give us two important opportunities at once:

- Separate the "old self" from the "new self" - the best version of ourselves. We psychologically close the "account" of last year's failures and perceive ourselves as a renewed, untainted and unburdened by mistakes.

- Strengthen personal effectiveness. As we open a new, clean chapter, we feel a surge of Xi and believe that this time we can really succeed.

Let's remember the iconic image of Bridget Jones. Almost every movie and book begins with the sacred phrase: "A new year - a new diary". This is not just a purchase of stationery, it is a classic example of using a temporal reference point - a nodal moment to try to change one's life. The heroine starts a new diary to draw a line between the "old Bridget" (lonely, smoking, self-doubting) and the "new Bridget" (successful, organized, and attractive to men).

The very act of writing notes is also a ritual that translates abstract desires and chaotic thoughts into a structured format and a formal commitment to yourself.

It can work the same way in investing: buying a new notebook to keep track of assets or opening a new sub-account on January 1 is psychologically perceived as creating a new starting point from which old mistakes, like impulsively buying stocks at the peak, no longer have power over you.

That is, financial committments made on Christmas or New Year's Eve are a priori charged with more power than the same promises made, for example, in the middle of March. Emotional rise and solemnity of the ritual give the installation additional psychological weight.

One promise and a loud statement is Ma. The New Year's commitments should become not just a wish list, but a new behavioral strategy. The following criteria will help you distinguish one from the other.

The Ritual of Discipline. In behavioral finance, as well as in cognitive-behavioral psychology, a lot of importance is placed on anchoring habits. These are roughly like conditioned reflexes in Pavlov's dog: ring a bell, salivation begins. For an investor, this means creating a ritual, such as, "Every Monday after my morning coffee, I transfer funds into my brokerage account." Christmas or New Year's Eve help not only to kick-start this habit, but also to reinforce it with strong positive emotions.

Goal Clarity. A New Year's resolution should be a SMART goal: Specific, Measurable, Achievable, Relevant, Time-bound, i.e. specific, measurable, achievable, adequate/relevant and time-bound. If a goal sounds like "earn more", it's not a SMART goal, it's an abstract construct. Research done back in 1990 emphasizes the importance of concreteness. That is, we come down from the high level abstraction of "earn more" to "in the new year, I will take qualification X to increase my annual income by 20% by December".

Consistency. The small steps method is important in this matter: Instead of "invest $5,000 right away," you can start with "invest $50 each over the next two weeks." That way you can see more often what those small investments give you. And research proves that small, frequent successes increase self-efficacy and make a long-term goal more attainable.

Acceptance of mistakes. A mere wish cannot be a mistake because there is no action in it. It is just a wish. Mistakes begin when we take some kind of action. So your strategy is a set of steps and assessments. Build into your strategy in advance the possibility of error. Failing one day or one week does not mean failing the entire year. Failures are also your data that can be analyzed like a company's financial statements, not a reason to abandon decisions or investments.

To make it easier to accept your mistakes, you can have a Forgiveness Day once a quarter, for example. It is like confession, after which sins are absolved. Only you are your own priest, you realize your "sins" of unsuccessful investments and forgive them yourself, moving on.

Focus on the process, not the result. You can't control the market, you can't "predict" the behavior of your peers, no matter how much data you have. But you can control how often you fund your account, what and when you buy, the structure of your investment portfolio. That is, the setup, the commitments, should be behavioral "I will regularly review my portfolio once a quarter", not "Ma's portfolio will grow by 30%".

New Year's committment is not a magic wand, but a powerful psychological tool. Like any tool, it must be used correctly.

To be continued

This article was AI-translated and verified by a human editor