Posted by: John S Kiernan

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The first of the year brings both the promise of new beginnings and the burden of self-improvement. Fueled by the nostalgia of the holidays and armed with a year’s worth of regrets, some 45% of Americans decide to make New Year’s resolutions each January, according to research from the University of Scranton. They are, it seems, taken by the spirit that led Benjamin Franklin to advise: “Be always at war with your vices, at peace with your neighbors, and let each New Year find you a better man.”

We all certainly have our fair share of vices, especially as they relate to money. So it’s unsurprising that financially themed promises for improvement tend to be among the most popular resolutions made each new year. However, the fact that only about 8% of resolution makers achieve their goals does not bode well for hopes of improved money management.

Neither historically low odds of success nor uncertainty about the best resolutions to make should discourage you from improving your financial habits, however. WalletHub’s editors have crafted the following list of the 10 Best Financial Resolutions for 2017, along with some helpful pointers for bringing them to fruition. The Ask The Experts section that follows also has some great insight on the psychology of resolution season and advice on overcoming its day-to-day challenges. So check it all out, and get ready to make 2017 a great year for your wallet.

1. 10 Resolutions for 2017
2. Ask The Experts: Making & Keeping New Year's Resolutions

10 Resolutions for 2017

1. Thoroughly Review Your Credit Report & Sign Up for Credit Monitoring

   Thanks to the increased availability of free credit scores, most people have a good sense of their credit standing these days. Too few of us are familiar with the contents of our credit reports, however, perhaps because we assume our credit scores tell the full story. But such thinking is flawed. For starters, as many as one in four people have a credit report containing an error that could affect their credit score, according to research by the Federal Trade Commission. Furthermore, reviewing at least one of your major credit reports on a regular basis will enable you to spot signs of fraud before they get too serious. You can start by checking your free TransUnion credit report on WalletHub.

   With that being said, no one can keep tabs on their credit around the clock. And that’s where 24/7 credit monitoring comes in. Signing up for free credit monitoring will enable you to receive an instant notification anytime there is an important change to your credit report. In other words, it reduces your reaction time for issues and gives you the peace of mind that comes with knowing you won’t miss anything.

2. Pay Bills Right After Receiving Your Paycheck

   Taking care of monthly obligations before allowing yourself to indulge in any luxury expenses is a helpful budgeting strategy, giving you a better sense of what you can truly afford and what you can’t. It also helps you avoid ever having a late payment reported to the major credit bureaus, which is one of the easiest ways to damage your credit score.

   The best way to ensure success is to set up automatic monthly payments from a deposit account. This will add discipline to the process without you having to think about it. To learn more about keeping your payment train on schedule, check out our 8 Tips For Never Missing A Due Date.

3. Repay 20% of Your Credit Card Debt

   The combination of a 0% balance transfer credit card and a well-crafted payment plan can help folks with at least “fair” credit save hundreds on finance charges while getting out of debt months sooner than they would otherwise. But considering that the average household with credit card debt will owe approximately $8,400 by the end of 2016, it will be difficult to reach debt freedom in one fell swoop. So we recommend starting smaller, by making a plan to transfer and pay off 20% of what you owe over the course of 2017.

   That would amount to about $1,680 for the average household, requiring monthly payments of $140 with a card offering 0% on transfers for at least 12 months. But you can use a credit card payoff calculator to crunch the numbers in your situation. And if you can afford higher payments, by all means make them. The sooner you can pay off what you owe, the better off your wallet will be.

4. Use Different Credit Cards for Everyday Purchases & Another for Debt

   The Island Approach involves isolating unique financial needs on separate financial accounts, as if they are a chain of islands. The most basic application of this strategy is using a rewards credit card for everyday purchases that you can repay in full by the end of the month and a 0% APR card for revolving debt.

   Doing so enables you to get the best possible terms on each card rather than settling for average terms on a single card. It will also help you reduce the cost of your debt, considering everyday purchases won’t be inflating your average daily balance. And if you ever incur interest on your everyday card, you’ll know you spent too much that month.

5. Add One Month’s Pay to Your Emergency Fund

   Roughly 54% of Americans do not have a rainy day fund, according to the Financial Industry Regulatory Authority. Like someone without insurance, folks who lack an emergency fund are merely tempting fate and putting themselves at risk of financial catastrophe in the event of prolonged unemployment or significant emergency expenses. Building up some monetary reserves should therefore be one of the first orders of business for any financial makeover.

   While we recommend ultimately building a fund with about 12 to 18 months’ take-home income, it’s important to understand that won’t happen overnight. As a result, you needn’t put the rest of your financial life on hold until your emergency fund is complete, but rather chip away at it over time. That’s key because we actually recommend creating a six-month safety net before even beginning to pay down your debts in earnest. Doing so will help ensure that you do not end up right back where you started upon finally reaching debt freedom.

   “Just as you might dress for success, spend for failure,” said Scott C. Hammond, a clinical professor of management at Utah State University. “Assume you will go 6 to 12 months every ten years without a pay check. Save accordingly. Live on a budget. Store a little food. Have a solid savings account with liquid assets.”

6. Improve Your Credit Score by 20 Points

   Less than 1% of people have perfect credit scores, which means nearly all of us have room for improvement. And 20 points is an amount by which pretty much everyone can improve their scores, regardless of the starting point. Furthermore, credit-score improvement in turn has the potential to save us quite a lot of money, on everything from loans and lines of credit to insurance premiums and apartment rentals.

   The first step in the credit-improvement process should be to get your free credit report and review it for errors. Once you’ve confirmed that everything is accurate, you can begin shoring up the weak points in your score. The grades on the Credit Analysis section of your WalletHub account will tell you what those weaknesses are.

7. Get an A in WalletLiteracy

   Financial literacy levels in this country are far too low. In fact, only 57% of U.S. adults are financially literate, according to a 2016 survey by Standard & Poor’s. That leaves us tied with Switzerland for 14th in the world, behind the likes of Canada, the United Kingdom and Singapore – just to name a few. What’s more, roughly 45% of Americans grade their financial know-how at a C or below, according to the National Foundation for Credit Counseling.

   This is important not only as it relates to our own finances, but also in terms of how our children will manage money in adulthood. Because children learn by example, how you handle money will serve as the foundation for their future relationship with finance.

   So start 2017 by taking our WalletLiteracy Quiz and getting a baseline score. Then, throughout the year, study the areas where you struggled and periodically re-test yourself to gauge your progress. Your goal should be to get at least an A- by the time 2018 rolls around.

8. Focus on Your Physical Health

   There is a clear connection between physical, emotional and financial health. For starters, the average person spends about $4,342 on health care each year, which represents nearly 8% of his or her total annual expenditures. Money is also our biggest sources of stress, according to the American Psychological Association. And people who get regular exercise tend to have better credit scores.

   This simply underscores the importance of not only getting your financial house in order, but also exercising regularly and engaging in other healthy practices aimed at reducing healthcare costs. It won’t be easy, but this is one resolution that will certainly pay dividends in multiple areas of your life.

   “If you begin to make small healthy changes to your diet, increase exercise in small increments, and practice yoga and meditation, you will feel better,” says Deborah Bauer, a distinguished senior instructor of finance at the University of Oregon. “Feeling better will lead to wiser financial decisions that focus on the long term.”

9. Make a Realistic Budget & Stick to It

   The fact that we’re on pace to rack up roughly $80 billion new credit card debt during 2016 is perhaps a bit less surprising when you consider that only about 40% of adults have a budget, according to the National Foundation for Credit Counseling. But both statistics also signal the need for greater urgency on our part.

   The best way to make a budget is to gather your bills from the past few months and make a list of all your recurring expenses. Then rank them in order of importance, with true necessities such as housing, food and health care obviously taking the top spots. After that, you can simply cut from the bottom of your list until your take-home exceeds what you plan to spend. Finally, keep track of your ensuing monthly spending to make sure you’re abiding by your budget.

10. Look for a Better Job

    Sometimes, we get so caught up in spending less and saving more that we forget to address the other side of the equation: how much we actually earn. But the benefits of finding a better-paying job could actually end up outweighing all your other financial maneuvering put together. Trading up career-wise isn’t necessarily as simple as scouring local job postings, however. Rather, you might need to consider moving in search of higher wages or a lower cost of living. Or you could go back to school to acquire skills that will add to your earning potential.

    Not all industries and areas of the country offer the same opportunities, after all. For example, the best city for job seekers in 2016 – Plano, TX, according to WalletHub research – has more than one job opening per unemployed resident and an average monthly starting salary of $3,016. Meanwhile, the worst city for jobseekers – Stockton, CA – has just one opening for every five unemployed residents and a monthly starting salary of $2,270.

Ask The Experts: Making & Keeping New Year’s Resolutions

We turned to a panel of leading experts in the fields of personal finance, business, management and psychology for additional insight into the best New Year’s Resolutions for achieving financial improvement and strategies for sticking to them. You can check out our experts’ bios as well as the questions we asked them and their responses below.

1. What are the Do’s and Don'ts of New Year's resolution-making?
2. To what extent does a solid support system make it easier to stick to resolutions? Is it a good idea to have a resolution buddy
3. Does rewarding positive behavior make it easier to accomplish a long-term goal? Are certain types of incentives better than others?
4. What is the ideal number of resolutions?

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• Todd Carothers Assistant Professor of Business Administration at University of Wisconsin-Platteville
• Linda Simpson Professor and Chair of the School of Family and Consumer Sciences, and Executive Director of the Literacy in Financial Education Center at Eastern Illinois University
• Juan Carlos Martinez Professor of Economics at Richland College
• Terrance Odean Rudd Family Foundation Professor of Finance in the Haas School of Business at University of California, Berkeley
• Martha Frost Professor and Chair of the Department of Human Development and Family Relations at SUNY Plattsburgh
• David Hirshleifer Professor of Finance and Merage Chair in Business Growth in the Paul Merage School of Business at University of California, Irvine
• Jeffrey Dew Associate Professor in the Department of Family, Consumer, and Human Development at Utah State University
• Terrance Martin Assistant Professor of Finance in the Department of Economics and Finance at University of Texas Rio Grande Valley
• R. Pete Parcells Associate Professor of Economics at Whitman College
• John Hilston Professor of Economics at Eastern Florida State College
• T. Clifton Green Associate Professor of Finance at Emory University, Goizueta Business School
• Robert Nathan Mayer Professor of Family and Consumer Studies at University of Utah
• Catherine A. Solheim Associate Professor of Family Social Science at University of Minnesota

Todd Carothers Assistant Professor of Business Administration at University of Wisconsin-Platteville What are the most important financial resolutions for people to make as we head into 2016? This depends on where you are at financially. Most people do not realize the amount they spend on different items in a year. The simplest resolution in this case is to diligently track your spending for a month or two to give an idea how much is being spent on food, utilities, coffee, clothes, etc. This then provides the opportunity to reassess what amount of that spending is essential versus nonessential. These steps are critical to improve savings rates and reduce debt. Other resolutions make sense if you already have a handle on spending, but many don't. CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? People tend to not realize what they are spending, which adds to this debt. The credit card bill at the end of the month tends to be a surprise. Again, keeping a simple tally of what you spend on a credit card in a month is a good way to combat this. At the end of the day, round up your purchases with credit cards to 20, 50 or 100 dollar increments (whatever makes most sense based on your income and spending levels). Then just make a checkmark on a sheet on the refrigerator for each 20, 50 or 100 you spend. This will give you a quick way to estimate your credit card bill and know when perhaps spending is getting out of control. What about government – how can local and national officials improve their financial performance in the New Year? Government is a completely different story. My biggest advice is to be sure to negotiate on pricing for new contracts and existing contracts and hold vendors to their contracts. Often, vendors take advantage of government spending policies. I experienced a software vendor who was charging schools in excess of 30% maintenance fees on the purchased software. Most schools do not negotiate this and just accept it as the going price, yet the traditional going price for maintenance is between 15 and 20%. The bottom line is to hold vendors accountable. What are the best practices for ensuring that resolutions turn into lasting changes? My approach to resolutions, as you see above, is to keep things simple. While it would be great to say everyone should make a household budget and stick to it, most people are not ready for that step. The key is not to make goals without having good information to form the goals. If you do this, the goals will be more realistic for each individual and more attainable. What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach? I would refer you to the previous advice. Break the goal into chunks. Don't make your responsibility to achieve the whole goal just the first step. So if the resolution is to get out of debt, what is the first thing you can reasonably do to move toward that goal. Focus and achieve that first before moving onto the next thing. Remember, you didn't get into debt overnight; you won't get out of debt overnight. To what extent does a solid support system make it easier to stick to resolutions? Is it therefore a good idea to have a resolution buddy? When it comes to financial resolutions, friends can be your worst enemies. People naturally want what their friends have. While there might be support for going to the gym, losing a few pounds, etc., friends are much less likely to restrict their spending to help you restrict yours. Also, people are actually more willing to say they are carrying a few extra pounds (probably because that is more obvious) than to say they need to cut back spending. Aside from your immediate family, perhaps, you shouldn't set financial resolutions expecting a support system. What about incentives - does rewarding positive behavior make it easier to adhere to a long-term goal? Are there certain types of incentives that are better than others? I think psychology would say rewards do help, but I advocate for the simple financial resolutions broken into chunks. This path doesn't require as much reward to see progress. In truth, if you need to set a financial resolution but need a reward to accomplish it, you are probably not ready to make the resolution in the first place. What is the ideal number of resolutions, in terms of maximizing impact and minimizing attrition? My approach is a breakdown of one goal into mini-goals. This may seem like I am advocating for dozens of resolutions but really you only have one or two broken down into manageable parts. Linda Simpson Professor and Chair of the School of Family and Consumer Sciences, and Executive Director of the Literacy in Financial Education Center at Eastern Illinois University I am not a fan of New Year's resolutions for the very reason that people who make them do not stick to them. I prefer goal setting - setting short and long term goals. This is much more exciting and forces people to think about their finances in the future. The two most important goals that people should make would be to pay off credit card debt and to establish a savings plan. Setting short term goals and breaking them down to smaller steps helps a person to see progress and motivates them to continue striving to get that debt paid off or to see a nest egg building. An accountability partner would be very helpful in achieving these goals by simply suggesting to participate in activities that cost less money, such as eating out less and cooking at home or going to a park rather than the movies. Setting too many goals can be overwhelming and it depends on the person and their personality as to how many that can be handled at once. There are other factors such as the length of time to reach certain goals. If the goals are aggressive, then fewer goals would be best. If the goals are achievable in a shorter period of time, then more goals can be set. Juan Carlos Martinez Professor of Economics at Richland College What are the most important financial resolutions for people to make as we head into 2016? Pay down or off debt. As interest rates rise, so will interest on credit cards. What about government – how can local and national officials improve their financial performance in the New Year? People need to take more responsibility for their actions. Government can’t solve everything. Terrance Odean Rudd Family Foundation Professor of Finance in the Haas School of Business at University of California, Berkeley What are the most important financial resolutions for people to make as we head into 2016? The most important financial resolution is to save more. Of course, most of us know we need to save more and for most of us it's hard to do. That's why 'save more' keeps showing up as an annual financial resolution. CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? Paying off your credit card debt is one of the most important steps to increasing your savings. You can't get an investment return as high as what your credit card company is charging you in interest. So, 'save more' and 'pay off credit card debt' are often the same resolution. But like other resolutions, such as going to the gym or losing weight, paying off credit card debt won't do you much good if you only stick with it until February. If you've accumulated significant credit card debt, you need to change how you use credit cards. Your goal needs to be to never charge what you can't pay at the end of the month. Credit cards make it easy to spend and easy to lose track of how much you are spending. At a minimum, write down every credit card purchase you make and keep an eye on your running total. Some people benefit from putting their discretionary spending money in an envelope at the beginning of the month. If you spend cash, take it from the envelope. If you charge on a credit card, remove that money from the envelope and put it in a second envelope used to pay the credit card bill at the end of the month. As the month goes on, you see how much money is left in the envelope. When the envelope is empty, no more movies, dinners out, or shopping on Amazon until the next month. If you are someone for whom credit cards simply make it too difficult to control spending, get out your scissors. What are the best practices for ensuring that resolutions turn into lasting changes? To ensure that resolutions turn into changes, automate the desired behavior or commit to taking small first steps. For example, one of the best ways to save each month is to set up an automated payment into your retirement account (e.g., IRA, Roth IRA, 401(k)). Or, suppose you want to reduce how much money you are spending online, make an agreement with yourself that whenever you want to buy something online you will wait at least one hour before completing the purchase. That can't be so hard. Or, better yet, wait until you've eaten your next real meal. You may find that some purchases don't seem as urgent and necessary after a break. Martha Frost Professor and Chair of the Department of Human Development and Family Relations at SUNY Plattsburgh What are the most important financial resolutions for people to make as we head into 2016?

1. To pay themselves first, contributing the maximum allowable amount to their 401(k) accounts and by beefing up their emergency funds (equalling six months of income);
2. To reduce/eliminate credit card debt with a New Year’s resolution; to repay the balance in full at the end of each month.

CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? Not unless consumers pay off their balance in full at the end of each month. Otherwise, they’ll be repaying an 18-24% loan! What about government – how can local and national officials improve their financial performance in the New Year?

1. By observing fiscally responsible habits themselves, and by encouraging fiscal responsibility among their constituents;
2. By supporting legislation requiring balanced budgets at the local, state, and federal levels.

What are the best practices for ensuring that resolutions turn into lasting changes?

1. By developing the savings habit by taking small, realistic steps toward saving, gradually increasing the percentage set aside;
2. By recording and tracking savings contributions; actually seeing the results of one’s savings efforts will reinforce the savings habit.

What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach?

1. By developing SMART resolutions, e.g., Specific, Measurable, Attainable, Realistic, and Time-sensitive goals;
2. By taking small, realistic steps (to build confidence) for reducing one’s debt.

To what extent does a solid support system make it easier to stick to resolutions? Is it therefore a good idea to have a resolution buddy? Having a resolution buddy is effective only if both parties are committed to making a concerted effort, offering mutual support to stay on track. What about incentives - does rewarding positive behavior make it easier to adhere to a long-term goal? Are there certain types of incentives that are better than others? Personally, I think intrinsic rewards (e.g., the satisfaction of accomplishing one’s goals) are more effective than extrinsic rewards (e.g., “treating” oneself for sticking to one’s goal). What is the ideal number of resolutions, in terms of maximizing impact and minimizing attrition? I operate by the “KISS” principle, i.e., Keep It Simple, Stupid! Prioritizing one’s realistic resolutions, keeping them simple, enhances one’s chances for success. David Hirshleifer Professor of Finance and Merage Chair in Business Growth in the Paul Merage School of Business at University of California, Irvine What are the most important financial resolutions for people to make as we head into 2016? Pay down loans; do not borrow at high rates of interest. Increase retirement saving. What are the best practices for ensuring that resolutions turn into lasting changes? Mark simple concrete next steps into your to-do list, such as, “log into my company’s retirement web site to change retirement allocations.” What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach? Do think about specific immediately implementable next steps. Jeffrey Dew Associate Professor in the Department of Family, Consumer, and Human Development at Utah State University What are the most important financial resolutions for people to make as we head into 2016? Move to a more financially stable place. Whether that means paying down credit card debt, starting an emergency or rainy day fund, or beefing up your retirement fund, research is clear that moving to a more financially stable place will pay dividends financially, emotionally, and relationally. CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? Absolutely. What are the best practices for ensuring that resolutions turn into lasting changes? It has to be a goal that you are really passionate about. If you are only half-heartedly invested in the goal, for example if you have to talk yourself into setting the goal in the first place, you probably won't succeed. People only change things when they realize they need to change it and when they have the energy or passion to make the change. What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach? Make your resolutions specific and achievable. What about incentives - does rewarding positive behavior make it easier to adhere to a long-term goal? Are there certain types of incentives that are better than others? Incentives are great. Just don't let the incentive interfere with the behavior you are trying to change. For example, going to an all-you-can-eat restaurant for losing a certain number of pounds is probably not the best idea. Likewise, putting a purchase on the credit card that you've been paying down is also likely to be problematic. Terrance Martin Assistant Professor of Finance in the Department of Economics and Finance at University of Texas Rio Grande Valley What are the most important financial resolutions for people to make as we head into 2016? I think this question will be very different based on individuals. For some, the resolution may be focused on better managing their debt, improving credit, maybe purchasing a major asset. However, whatever the resolution, it should be focused on being better than 2015. It needs to be SMART i.e., specific, measurable, attainable, realistic, and time-bound. CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? Well, again, here it depends on the individual. 68.5 billion in debt is a significant amount, but we need to identify what is the use of the debt. Now, if the credit card debt was used to somehow facilitate income generation or to purchase a needed asset, or create a new business venture then there would be a need for greater assessment to determine an individual response. On the other hand, if the source of debt is uncontrolled consumption then that may be problematic in the long-run, especially for the credit revolvers among us. What about government – how can local and national officials improve their financial performance in the New Year? Million dollar question and one that may often be answered based on one's political persuasion. Luckily, I am neither democrat nor republican. However, I think for the government to improve their financial performance would be to continue to be prudent in their fiscal management. Government deficit spending has made great strides in the last few years, and, if I am not mistaken, the Obama administration reported that they have managed to erase the deficits left by President Bush. Better use of government resources is essential to reducing waste while maintaining an environment where individuals believe they can make investments into their own future i.e., a new business, a new house, etc. What are the best practices for ensuring that resolutions turn into lasting changes? Accountability; tell everyone about your resolutions. Have someone keep you on track to achieving them. Make it fun; make a game out of it. Individuals respond well to incentives. Ask for help, don't do it on your own. Accountability is essential. But the resolutions have to be SMART. If you can't do it alone then hire a financial planner that is focused on financial planning and not just investment management. What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach? Make it a SMART goal. Ask yourself how much debt, by what time, which of your debt portfolio? Have a strategy of tackling the debt that costs you the most at first. Then go on to the second most costly. If the goal is NOT SMART then it’s just a dream, and you may likely not be successful. To what extent does a solid support system make it easier to stick to resolutions? Is it therefore a good idea to have a resolution buddy? It is everything to being successful. Accountability is critical to staying on the course. The ability for someone to call you out when you are going astray is huge to staying on track. Make it fun and create a community around your goal. What about incentives - does rewarding positive behavior make it easier to adhere to a long-term goal? Are there certain types of incentives that are better than others? I am a supporter of incentives because rational people respond to incentives. The incentive is group specific, for some it may be money, for others it could be attending an event, or quality time with an individual. What is the ideal number of resolutions, in terms of maximizing impact and minimizing attrition? I don't think that there are a specific number of resolutions. We just have to make them count. Too many may be too taxing on an individual. You have to know yourself and your ability. You need to have the right support system in order for you to be effective. R. Pete Parcells Associate Professor of Economics at Whitman College What are the most important financial resolutions for people to make as we head into 2016? Make up a realistic budget. Where can you cut back? Where can you expand (savings)? What are some of the extreme scenarios to prepare for - job loss, health issue, family member support? How to include these into your budget planning? CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? The USA works on credit and credit cards. The debt is not the problem; the problem is how much interest is being paid on the debt. If one pays off their credit card each month, there is no interest payment. If one cannot pay off the credit card debt, one should take out a regular bank or credit union loan because the interest rate is so much less; many fewer dollars will ultimately be paid. What about government – how can local and national officials improve their financial performance in the New Year? The trouble is we are the government and we are unwilling to elect officials who will do what is best for the local, regional, or national economy but will impact our own pockets negatively. If the system becomes more efficient, why should taxes go up every year? They should be going down. But they go up and the deficit goes up and services go down. Everyone wants the government to do something for them but not for the best of society. What are the best practices for ensuring that resolutions turn into lasting changes? Positive incentives always work the best. For example, giving rebates if loans are paid off early, or providing positive incentives (gifts?) if one stick to a budget would be a good approach to ensuring lasting change. What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach? Gradual changes, not just a “I am going to start the new year by doing X”. If one has not been able to get out of debt until now, why would a new year make a difference? Also, one needs to look outside the box. To get out of debt and balance a budget, one might think about ways of increasing income. Part time work, a small part time business, help others for a small fee with your own expertise, even just a barter system (I help my neighbors with their computers in exchange for vegetables from their garden) can help. To what extent does a solid support system make it easier to stick to resolutions? Is it therefore a good idea to have a resolution buddy? Sure, a support system would help, but generally your buddies have the same issues and may or may not be helpful. It takes a real commitment by the individual to make a change. Positive reinforcement (maybe from a buddy) is what works the best but this reinforcement usually needs to come from within. What about incentives - does rewarding positive behavior make it easier to adhere to a long-term goal? Are there certain types of incentives that are better than others? Of course this is true. Incentives need to be in the short term, even though their impact may only be in the long term. It is different for each individual depending on their "personal discount rate." This is a concept which is somewhat complicated and so not easily explained here in this short space. But it is why a poor person may live in a run-down home but drives a brand new expensive car or why someone would pay 27% interest for a "payday" loan. What is the ideal number of resolutions, in terms of maximizing impact and minimizing attrition? The ideal number is one - that is - one bundle of resolutions to obtain one goal. If you want to get out of debt (one goal), there may be several steps (a bundle of debt reducing resolutions) which need to be followed. The real test of any resolution (or resolutions) is to put them into a realistic time frame. It is like trying to lose weight - you can't decide to eat a lot less and then be lighter overnight - it may take months or a year but small doses (less food) consistently in the short run will lead to long term goals. The same with debt. John Hilston Professor of Economics at Eastern Florida State College What are the most important financial resolutions for people to make as we head into 2016? Value every dollar! One saves even more by not attending the sale. Also, make sure to scrutinize store and restaurant receipts. The price you are charged should match the price that is posted. Believe it or not, this may not always happen. Well-meaning stores may not correctly adjust their systems for an advertised sale price. And well-meaning restaurant servers may not always ring up your tab correctly. CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? Absolutely! Use credit cards sparingly. Think of it this way: when you use a credit card and don't pay off the balance at the end of the month, you're really saying "I want it now! Please take an even larger sum than the market price out of next month's paycheck". What about government – how can local and national officials improve their financial performance in the New Year? I wish government would get away from this notion that they can spend us into prosperity. When governments borrow to feed their overspending, the victims of this theft are our children. It is immoral and unfair to leave a fiscal mess for future generations. What are the best practices for ensuring that resolutions turn into lasting changes? Make no mistake, changing one's behavior is hard work! And big resolutions can be daunting. Whatever the size of one's resolution, for it to be successful, it must be broken down into day-size and hour-size objectives. Good planning is key. What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach? Don't make unreasonably big resolutions. Get out of debt yes, but the first step is to incrementally reduce spending so that you can afford to make a bigger monthly payment against one debt. A couple examples: find something that you'd really like to bring for lunch at work in order to avoid eating out. This might help with a weight loss resolution, too. Or simply order water with dinner instead of a Coke. To what extent does a solid support system make it easier to stick to resolutions? Is it therefore a good idea to have a resolution buddy? Support systems and accountability are important. Make a pact with your spouse or a good friend to hold you to your goals. But don't go too far outside your comfort zone with this. Otherwise, you will quickly dismantle this framework. What about incentives - does rewarding positive behavior make it easier to adhere to a long-term goal? Are there certain types of incentives that are better than others? Yes, rewards are critical. Life needs to be fun! Plan a small reward for yourself occasionally, but it might be best to avoid a retail reward if you're trying to improve spending habits. What is the ideal number of resolutions, in terms of maximizing impact and minimizing attrition? I'd say one or two. Focus is important. T. Clifton Green Associate Professor of Finance at Emory University, Goizueta Business School For physical health, the key is to be mindful about what we eat and how much we exercise. For financial health, the key is to be mindful about what we spend money on and how much we save. What are the most important financial resolutions for people to make as we head into 2016? New beginnings, such as the beginning of a year but also birthdays, new jobs, or even just the beginning of the week, are good times to refocus our attention on how we spend and save. The most important initial goal is to live within your means. Once that is accomplished, a better goal is to save 10-20% of your income, and the older you begin saving, the more you need to save. CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? Right. Credit cards are convenient for transactions, but they can diminish the sensation of spending relative to removing bills from your wallet, and they make it easier to rack up debt. What are the best practices for ensuring that resolutions turn into lasting changes? One possibility to consider is the save more tomorrow approach, where you commit to save a portion of future salary raises. This feels relatively painless since the saving happens in the future rather than now, and at a time when spending levels also increase. An important impediment to saving is that it is hard for us to imagine ourselves 20 or 30 years in the future. Our future self seems like a stranger, and saving for the future can almost feel like giving to charity. Spend time with older generations and remind yourself this will be you some day. This is good advice for attempts to improve physical health as well. What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach? Although focusing on the credit card with the highest rate makes the most overall financial sense, for a quicker win consider aiming for the card with the lowest balance first. Once that debt is eliminated, take the extra money and apply it to the next-smallest balance. A zero balance feels good. Use that momentum to gradually eliminate credit card debt. What about incentives - does rewarding positive behavior make it easier to adhere to a long-term goal? Are there certain types of incentives that are better than others? The primary reward for financial health is feeling financially secure in retirement, which also benefits future physical and emotional health. Failing to properly save robs our future well-being. But our current selves are also important, and we can spend more wisely by better understanding what makes us happy. We habituate quickly to things. After the initial thrill of a new TV or car, we no longer find it a source of happiness. And impulse purchases result in the shortest happiness boost. On the other hand, spending on experiences such as a vacation or music lessons can be a continuing source of happiness through treasured memories and continued personal development. Robert Nathan Mayer Professor of Family and Consumer Studies at University of Utah What are the most important financial resolutions for people to make as we head into 2016? One of the most important resolutions someone can make is not to leave money on the table at work by failing to take full advantage of any employee match on retirement savings. A related resolution would be to use auto-escalation to gradually increase the amount of money a person saves for retirement at work. And, finally, a resolution should be to contribute annually to a Roth IRA. This is especially true for younger workers who are likely in a low tax bracket. CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? While credit card debt is increasing on a year-to-year basis, I am more concerned about the total amount of credit card debt outstanding (about $700 billion). The good news is that this amount is well under the $1 trillion record amount of 2008. Catherine A. Solheim Associate Professor of Family Social Science at University of Minnesota What are the most important financial resolutions for people to make as we head into 2016? As we often do for eating and exercising behaviors, the flip of the calendar to 2016 offers a good time for people to ‘reset’ their spending behaviors. We can easily fall into less than optimal habits – spending mindlessly, cognitively shifting ‘wants’ to ‘needs’, and sabotaging our long-term goals with short-term fixes. January is a good time to track spending (which in and of itself changes behaviors), evaluate patterns, reset one’s spending plan and more frugal spending habits. So, in a nutshell – spend less, reduce debt, and save more! CardHub predicts that consumers will rack up at least $68.5 billion in credit card debt during 2015 – that’s worthy of a resolution, right? It certainly is! The long-term consequences of debt are significant. Families find themselves locked into repayment mode, leaving little wiggle room for saving or planned spending. If this also reflects that there is no cash reserve available for unexpected expenses, it also means that if something should come up, an emergency or unplanned expense arises, the only option is to add to the debt load and the cycle continues. What are the best practices for ensuring that resolutions turn into lasting changes? Just like any behavior change, financial goals aren’t accomplished overnight. Prochaska and colleagues (1992) suggest that there are stages of change that are essential to making change stick. Once you realize that a change is needed, some thinking and preparation has to occur. This is where one gathers information about their situation, resolves to make a change, and begins to take initial steps – expense tracking and developing the plan are steps that occur in this stage. At this stage, I encourage people to enlist others. Financial behavior change in families is rarely accomplished if only one person is committed. Talk about the importance of your goals, ask each person how they can contribute, decide how you will hold each other accountable for the changes. Then people take action – or start to enact the change you want. This is an exciting stage – we feel motivated and empowered to makes these changes. But as is often the case, we can become lax and pay less attention, falling back into old patterns. So the final stage is maintenance, which often begins about 6 months after the first actions are taken. Recommitting to the change – perhaps taking time to again track expenses and evaluate one’s spending plan, reading motivating articles that share others’ success stories. I’m a big believer in the power of visuals – if you are trying to reduce spending and increase saving, post a chart on the refrigerator (this gets the whole family involved!) and track your progress. Find ways to reward your progress. Perhaps a family outing that doesn’t break the bank would be a way to celebrate. What are the Do's and Don'ts of New Year's resolution-making? If, for example, someone wants to get out of debt in the New Year, what would be the best approach? Got to go back to the SMART goals ideas. The “I need to get rid of my debt” approach will most likely not result in that outcome. A good goal zeroes in on specific, measurable, attainable, relevant, time-bound strategies. You need to ‘see’ yourself in the new behavior, know when you can say you’ve accomplished your goal, feel that you can do this and that it will make a difference in your life, and hold yourself accountable to a date at which point you’ll celebrate that you’ve made it, or reset with a new goal. We will pay $XX (the credit card statement will tell you what it will take to pay off your balance in a specific time frame) on YY credit card (perhaps the highest interest rate card) for 6 months to pay off the balance. We are also committed to not using the card during that time period. When we reach a 0 balance, we will do the same with card ZZ for the next 6 months. To what extent does a solid support system make it easier to stick to resolutions? Is it therefore a good idea to have a resolution buddy? I mentioned this earlier, as someone who works with families to reach their financial goals, it’s so important that everyone in the family be on board. That means they agree that this is a good and important goal, they understand why it’s important, and they see their individual role and contribution to achieve the goal. A monthly family check-in to see how you’re doing can help keep everyone moving in the same direction. I think it’s also good to look around your circle of friends and identify if your patterns with them are getting you into financial difficulties. For example, is there pressure at work to eat out for lunch every day? That can blow your food spending plan quickly! I would imagine there are others in the same boat but who don’t feel comfortable talking about it. Bring this up with the group and enlist them to shift to a more reasonable pattern. It doesn’t have to be all or nothing. Perhaps you agree to eat your food from home together from Monday – Thursday and go out to eat on Friday. That way you ‘treat’ yourself at the end of the work-week. There are many creative ways to cut back – enlist your friends to be part of the solution – it will benefit all of you!

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