New Year's resolutions are a mixed bag of hope and misery. Think about it—we set ourselves up to fail with resolutions that are—by their very nature—passive. "I resolve to lose weight.” “I resolve to get out of debt.” “I resolve to stop eating Twinkies with my bourbon."
Let's make a pivotal shift: we can declare 2014 the year of the "Action Plan". There, doesn't that feel better just saying it?
Action plan. With real steps that will take you closer to satisfaction than any "resolution" is likely to bring you.
The experts will tell you it needs to be understandable, doable and measureable.
Let me add that it’s got to be in your face. Inescapable. Habit-forming.
An example? Let’s suppose you are ready to build an action plan around creating financial security. You might make your action plan look like this.
1. Understandable: Financial security is all about putting your head on the pillow at night—and actually sleeping. You’ll want to look—hard—at how much risk you can absorb (from market changes or losses due to accident, injury, loss of income, etc). Define how much you need in an emergency fund: for many it should be 6-9 months of expenses in liquid assets. Consider whether you are properly protected by life, disability, health, property and liability insurance. Specify your long-term goals, i.e. retirement, college for children, buying a home—what matters most?
2. Doable: Can you achieve your targets? It might require some minor tweaking or a major overhaul. Get a handle on where you stand and what is necessary for the job (you don't use a sledgehammer to hang a picture hook). Is it a paycheck by paycheck affair, making small steps (401(k) contributions, debt reduction, emergency fund deposits, college plan investment) or do you require the assistance of a CFP(TM) to help you create a financial plan that helps you put your ideas into workable order?
3. Measurable Results: Like dieting, unless you see the pounds come off, keeping up the effort is a challenge. So how you measure your financial success is critical. The short-term tends to be easier: you can quickly see your credit card debt go down or your emergency fun go up. But longer-term? The stock markets will probably not respond with an upsurge on the news that you've opened an investment account. When gauging investment success, you want to use the correct measurement tool. If you live in NY and want to know the distance to San Francisco, a 12 inch ruler is probably the wrong device.
4. Written: Ideas that swim freely in your head are not plans—they're ether. Writing them down is where the power lies. It requires time, thought, commitment and intention to convert your thoughts into a viable action plan. If it’s important it’s worth the time to 'memorialize' and become your mission.
5. Habit-forming: Just like changing your eating habits, achieving financial security requires top of mind awareness. To combat the urge to spend, you have to create a suit of armor. One that you strengthen by reading and re-reading your written plan multiple times a day. It's like taking Vitamin C when you feel a cold coming on—multiple doses per day help keep up your ability to fight off the germs of spenditis. Read your action plan first thing in the morning, at lunch, mid-afternoon, dinner-time and before bed. Seriously. That’s what it takes.
As the calendar flips from 13 to 14, you get a reset, a do-over, a new slate to begin something important. Take your thoughts and ideas, talk to each stakeholder in your overall success and create your action plan. Have fun with it, celebrate it, feel great about every small success and appreciate your efforts.
It's a hell of a lot better than carrots and celery sticks.