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January Commentary: The New Year's Resolution

The New Year's Resolution. A commitment we make to ourselves—when we've had a few too many cookies, or cocktails, during the Holiday season—that we then spend twelve months trying desperately to hang on to.

Many people don't even make it to month two. In fact, I would venture to say that some of the people reading this have probably already strayed from their goal. And the numbers don't lie. According to the Journal of Clinical Psychology, just 8% of people are successful in achieving one or more of their resolutions in any given year, and 24% of us never succeed in achieving any of our resolutions year after year after year.

So why the high failure rate? It's not like we make insignificant resolutions. The Journal found that "losing weight" was the number one resolution (no shock there), followed by "getting organized" and "spend less, save more". This was followed by things like "get fit and healthy", "live life to its fullest", and "spend more time with family". All very important things.

Antonio Damasio and Joseph LeDoux have the answer. These renowned brain scientists studied what they called habitual behavior—that is, neural pathways and memories that become the default basis for our responses whenever we're faced with a choice or decision. These defaults, they found, are very difficult to change, and actually can be strengthened by efforts to "not do" things that feel natural or have been longstanding habits.

The lesson: Real change—actually succeeding in our resolutions—requires us to carve out new neural pathways. We need to rewire our brains, create good habits, and the achievements will fall in line.

The first step in rewiring our brains is to understand the difference between goals and desires. According to speaker Dr. Randy Marshall, this is the very essence of where we err in accomplishing the things we set out to do. A properly defined goal is something completely in your control—something whose success is only determined by your actions. A desire, on the other hand, is the outcome you wish for, but involves external forces, things outside of your individual control.

Let's take, for example, "I want to retire when I am 65." To some, that would sound like a good goal. However, this is more of a desire than a goal, as there are many factors beyond your control that will contribute to your ability to do so. A goal in this case might be to contribute $5,000 per year to a ROTH IRA, as that is something you decide on, and requires action on only your part to make happen.

To accomplish our goals, we must create good habits. Most people who fail at saving more money, no matter the purpose, do so because they leave saving money to the end of the month or end of the year. This fails because our nature is to spend what is available to us, which results in not having enough money to save. The better strategy here is to pay yourself first, and spend from what is left. Think about it: why should your credit card companies, electric and water provider and even your cable company get their money before you pay the most important person in the whole equation—YOU? They shouldn't. Just like those who go to the gym in the morning are more likely to form good habits (because they don't let the distractions of their daily life get in the way of the gym), those who save first and spend last are far more likely to reach their financial desires.

Good Habit # 1 - Starting on February 1st, write yourself a check on the first of each month, for the amount you are comfortable saving on a regular basis. Put that money in a savings account, and then go about your normal life. At the end of the year you will feel better about your financial situation, have more money, and be able to make that ROTH contribution to boot.

When it comes to financial goals and desires, it is also important to review your situation on a regular basis. While this might seem like a shameless plug to encourage you to come in and meet with me, it is not. The truth is that those who plan, who seek our professional advice, and who have a strong understanding of their own financial health are more likely to succeed. With the tremendous amount of information available, it is critical that you are meeting with your advisor (me, or someone else) on a regular basis to review and rebalance. Just like you go to a doctor for a medical checkup, you should go to a financial advisor for a financial checkup.

Good Habit # 2 - While you are setting goals for the coming year, make at least an annual appointment with your financial advisor a goal. Whether your resolution was "get fit and healthy", "live life to its fullest", "spend more time with family", or something else entirely, it will go a long way to ensuring you achieve your desired outcome.

Of course, you still have to actually take these steps, and it's easy for them to get lost in the background noise of your daily life. Ray Williams, author of "Breaking Bad Habits," recommends that if you're truly serious about sticking to your resolutions, recruit an "accountability buddy" who you will have to report to on a regular basis. That can be a spouse, friend, parent or even your financial advisor.You'll find a way to get your resolutions on your own personal priority list, and do these things for someone else because you don't want to admit that you failed to take the steps you promised to do.

It may also help to keep the goals in front of you—on your computer screen or tacked up in a place where you can see them. This will remind you to ask yourself: what's the one thing I can do today, right now, towards my goal?

Don't give up when you slip—and you will. Simply continue working at your goal.

And finally: Recognize that creating new neural pathways in your brain is hard work—far more work than simply writing down a resolution. All the best in sticking to your resolutions, and let me know how I can help!

Surprised by Serenity by Randy Marshall and Zach Miller

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 Securities offered through American Portfolios Financial Services, Inc. Member FINRA/SIPC (FINRA/SIPC). American Portfolios Financial Services, Inc. and American Portfolios Advisors, Inc. are not affiliated with any other named business entities mentioned.

This communication is strictly intended for individuals residing in the state(s) of CA, CO, CT, FL, IL, KY, MA, MD, NJ, NY, PA and VA. No offers may be made or accepted from any resident outside the specific states referenced.

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