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Pete the Planner: Why financial New Year's resolutions are dumb – USA TODAY

It never fails. About five times per year, I have an email conversation with a random person that goes like this.

Pete, what should I do?

Answer:You should do this.

Pete, I don’t want to do that. What should I do instead?

Basically, people ask for my second-best piece of advice. I’m not going to do what you say I should do; what else should I do? Because of this strange phenomenon, I’m going to try something different this time around. I’m going to give you my second-best piece of advice, first.

We should probably start with my best piece of advice, which I fully expect you to ignore, thus eliciting my second-best piece of advice: Don’t make financial New Year’s resolutions. That’s my best piece of advice. I think New Year’s resolutions are silly and arbitrary. By making one, you are admitting financial change isn’t important enough to make now. On principle, I can’t recommend a process that involves people choosing to care later. Alas, choosing to care later is what folks tend to do these days.

Now, get ready for my second-best piece of advice. This is the advice I expect you to follow.

Your New Year’s resolution should be designed specifically for 31 days. That’s it. Don’t resolve to be better for 366 days (the leap day can’t fool me). Just see what you can do in January. Besides, if you can’t win January, when you supposedly care the most, then how in the world can you win the entire year as your interest continuously wanes?

While we’re at this second-best piece of advice New Year’s resolution parade, allow me to introduce you to the grand marshal, measure your behavior. If you want a chance at having your resolution matter, don’t measure dollars and cents. Measure your habits and behaviors. For instance, “I’m only going to spend $300 dining-out” isn’t that great of a goal. Instead, you should take the time to calculate the average number of times you dine out in a month, and then reduce the number of occurrences by 20%. That should be your goal. Dining out less frequently will obviously result in less money being spent. You will have changed the habit and you will have accomplished your initial goal of spending less money.

Looking for a few other 31-day goal ideas? Start by identifying the areas of your financial life that involve deficiencies. People tend to struggle with saving money, ignoring debt and effectively communicating with their significant others. Again, focus on habits when you address these areas of opportunity. Transfer a nominal amount of money from your checking account to your savings account every Monday at 2 p.m. for the entire month. Make a payment on a particular debt every Thursday at 8 a.m. for the entire month. Have a financial discussion with your partner every Sunday at 1 p.m. for the entire month of January.

On Jan. 31, which is a Sunday, examine your new habits, examine how your cash flow has been affected and put together a new plan for February. You can begin by continuing the new habits you’ve established, and then building on them.

Let’s say you ignore my second-best piece of advice because you’d rather focus on the dollars and cents. Here’s what’s going to happen — you will get short-term results and you’ll have no new healthy, sustainable habits. If that happens, hopefully you’ve saved this column to read again next December.

Do you really want to mess with my mind? Ignore my second-best piece of advice, and just follow the first piece of advice. Don’t involve yourself in the New Year’s resolution game. Start caring today.

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