Top Ten Financial Resolutions for 2018

Summary

WSJ Your Money Briefing: Top Ten Financial Resolutions for 2018

Podcast: WSJ Your Money Briefing
Episode: Top Ten Financial Resolutions for 2018
Host: Charlie Turner
Guest: Jill Gonzalez, WalletHub Analyst
Date: January 1, 2018

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Overview

In this episode, host Charlie Turner speaks with WalletHub analyst Jill Gonzalez to break down WalletHub’s top ten financial resolutions for 2018. Drawing from trends in 2017, economic predictions for 2018, and input from finance and consumer psychology experts, they discuss actionable, practical steps that can help listeners improve their financial health in the new year. The conversation touches on credit monitoring, budgeting, debt repayment, emergency funds, financial literacy, credit scores, and even non-financial areas that can nonetheless impact economic well-being.

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Key Discussion Points & Insights

How the Resolutions Were Compiled

• The resolutions are based on trends from 2017, economic forecasts for 2018, and advice from finance and consumer psychology experts.
  • Jill Gonzalez: “We’re looking at the economic predictions and then basing resolutions off of that.” (01:08)
  • Charlie Turner: “They were based in part on conversations with a panel of leading finance and consumer psychology experts.” (01:24)
  • Jill Gonzalez: “Once we looked at trends, once we looked at predictions, we also asked experts … what they thought 2018 should hold in store for the average consumer.” (01:32)

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1. Sign Up for Credit Monitoring ([01:43])

• Given the persistent data breaches, like the 2017 Equifax hack, credit monitoring is essential.
• Free credit monitoring and scores are widely available.
  • Jill Gonzalez: “You can proactively get text messages, you can get emails to see if your data has, in fact, been breached and quickly find out how to stop it or hopefully prevent it.” (02:11)

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2. Pay Bills Right After Receiving Your Paycheck ([02:39])

• Automating bill payments immediately after payday can boost your credit score and improve credit utilization.
• Useful strategy: Set up two automated monthly payments—one right after payday, another a couple of days before your due date to avoid interest charges.
  • Jill Gonzalez: “Paying your bill early right after you get that paycheck improves your credit utilization, it improves your credit score.” (02:50)

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3. Make a Realistic Budget and Stick to It ([03:27])

• The emphasis is on realistic budgeting.
• Gather bills from recent months, list recurring expenses, rank by importance, and cut lower priorities until expenses don’t exceed income.
• Quarterly reviews recommended to ensure adherence.
  • Jill Gonzalez: “The best way to do that is to gather your bills from the past few months ... rank them in order of importance.” (03:46)
  • Jill Gonzalez: “Keep track of your monthly spending throughout the year, I would say quarterly at least, to make sure that you’re actually abiding by that budget.” (04:17)

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4. Repay 20% of Your Credit Card Debt ([04:31])

• Assumes many consumers are carrying high balances; $1 trillion in national credit card debt, $8,400 average per household.
• 20% repayment goal is ambitious but realistic.
  • Jill Gonzalez: “The average household has about $8,400 in credit card debt, more than we were seeing pre-recession ... we really have to rein it in and repay a good portion of that debt.” (04:56)
• Strategies: Smart budgeting, payment automation, and “island approach”—using different cards for different types of expenses.

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5. Add One Month’s Pay to Your Emergency Fund ([05:51])

• Over 50% of Americans lack a “rainy day fund,” despite 2017 being a big year for emergencies.
• Long-term goal: 12-18 months of take-home income.
• Start by adding one month’s salary to the fund this year.
  • Jill Gonzalez: “We recommend adding one month’s pay to your emergency fund by the end of the year. Eventually, [the] fund should look like about 12 to 18 months’ take-home income. That’s not going to happen overnight.” (06:33)
• This can be done alongside paying down debt and budgeting.

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6. Get an ‘A’ in Wallet Literacy ([07:15])

• U.S. ranks 14th globally in financial literacy; aim to improve your own knowledge.
• Take WalletHub’s wallet literacy quiz; topics include credit, investing basics, and understanding interest rates.
• Increased literacy helps not just you but your family and friends.
  • Jill Gonzalez: “You want to be getting around an A minus in your financial literacy ... not only benefits you, it benefits your children, it benefits your friends, anyone who has financial questions, which obviously we all do.” (07:44)

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7. Improve Your Credit Score By 20 Points ([08:26])

• Focus on understanding what improves your credit score, e.g., keeping accounts open, making on-time payments.
• Less than 1% have a perfect score; 20-point improvement is realistic.
• Recommendation: Don’t close unused accounts; payment history is crucial.
  • Jill Gonzalez: “Maintain an open credit card account. Try not to close any even if you’re not using them ... keep up with on-time payments, make sure you’re not skipping one ... those things alone should increase your score by 20 points.” (08:52)

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8. Focus on Your Physical Health ([09:27])

• Physical, emotional, and financial health are closely linked; the average person spends $4,600 a year on healthcare.
• Building an emergency fund also safeguards physical health by reducing financial stress tied to medical emergencies.
  • Jill Gonzalez: “There’s such a clear connection between physical, emotional and financial health ... Focusing on that physical health will in turn help your financial life as well.” (09:38)

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9. Look for a Better Job ([09:27])

• 2018 is projected to be a strong year for job seekers: unemployment expected to drop to 3.9%.
• Job seekers have the advantage; don’t be afraid to move, but secure a job first if relocating.
• Regional job markets vary: e.g., Scottsdale low unemployment, Detroit high.
  • Jill Gonzalez: “3.9% would be the lowest we’ve seen since the late 60s. So it really is a job seekers’ market right now... Don’t be afraid to move around in 2018.” (10:41)

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Notable Quotes & Memorable Moments

• On hacks and credit monitoring:
  “2017, and it sounds like we’re actually saying this year after year, was a bad year for hacks and data breaches.”
  — Jill Gonzalez [01:52]

• On sticking to budgets:
  “The key word here is realistic. I think we all have pretty lofty ideas of what we’re going to do money-wise in 2018.”
  — Jill Gonzalez [03:36]

• On U.S. debt levels:
  “We’re supposedly breaking the $1 trillion mark in outstanding credit card balances alone ... more than we were seeing pre-recession.”
  — Jill Gonzalez [04:45]

• On emergency preparedness:
  “Over 50% of Americans don’t have a rainy day fund. And ... this was a huge year in terms of emergencies.”
  — Jill Gonzalez [06:14]

• On job prospects:
  “2018 is going to be a great year for the job market. We’re expected to hit 3.9% in unemployment. Right now we’re at about 4.1. That’s the lowest it’s been in 17 years.”
  — Jill Gonzalez [09:38]

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Timestamps for Key Segments

| Timestamp | Segment Description | |-----------|---------------------------------------------------| | 01:05 | How WalletHub compiled the resolutions | | 01:43 | Resolution #1: Credit monitoring | | 02:39 | Resolution #2: Pay bills after paycheck | | 03:35 | Resolution #3: Make and stick to a budget | | 04:31 | Resolution #4: Repay 20% of credit card debt | | 05:51 | Resolution #5: Add to emergency fund | | 07:15 | Resolution #6: Improve financial literacy | | 08:26 | Resolution #7: Raise credit score 20 points | | 09:27 | Resolutions #8–9: Health & job search |

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Conclusion

This concise yet insightful episode arms listeners with actionable resolutions to strengthen their finances in 2018, addressing everything from routine habits like bill paying and budgeting, to larger goals such as improving financial literacy, boosting credit scores, and advancing careers. As Jill Gonzalez summarizes, each resolution is realistic and interlocking, providing a holistic blueprint for financial well-being in the year ahead.

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Guest: Jill Gonzalez, WalletHub Analyst
Host: Charlie Turner

Listen via WSJ Your Money Briefing

Transcript

[Charles Schwab Sponsor]

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[Wall Street Journal Announcer]

This is yous Money Matters from the Wall Street Journal.

[Charlie Turner]

Welcome to youo Money Matters. I'm Charlie Turner in New York. Nearly half of all Americans make New Year's resolutions, and with money always a top concern, many of the resolutions will be financially based. WalletHub is out with its 10 financial resolutions for 2018, which are designed to help as many people as possible reach top financial fitness in the new year. Here to help run down the 10 is WalletHub analyst Jill Gonzales. First of all, Jill, how were these resolutions compiled?

[Jill Gonzalez]

Well, a lot of these resolutions, or all of them really were taken upon looking at two things. One, what we've seen trending in 2017 and two, what we're expecting in 2018. So we're looking at the economic predictions and then basing resolutions off of that.

[Charlie Turner]

And you write here that they were based in part on conversations with a panel of leading finance and consumer psychology experts.

[Jill Gonzalez]

Exactly. So once we looked at trends, once we looked at predictions, we also asked experts in the fields what they thought 2018 should hold in store for the average consumer.

[Charlie Turner]

Well, let's dive into them. The number one New Year's resolution on the WalletHub list is sign up for credit monitoring.

[Jill Gonzalez]

Yes. So 2017, and it sounds like we're actually saying this year after year was a bad year for hacks and data breaches. I think the biggest, of course, was Equifax, and we're not expecting really anything to change in 2018, sadly. But you don't have to be in the dark when things like that hit the news. You can sign up for free credit monitoring. And now there's an increased availability of free credit scores now more than ever. So most people have a good sense of their credit standing these days. If you're not one of them, then sign up for credit monitoring so you can proactively get text messages, you can get emails to see if your data has, in fact been breached and quickly find out how to stop it or hopefully prevent it.

[Charlie Turner]

And the next one on the list, number two, Jill, is pay bills right after receiving your paycheck.

[Jill Gonzalez]

It makes sense, but unfortunately, this is one that people might think that they're going to do when January Hits all of a sudden it's February and this isn't a priority for them anymore. But paying your bill early right after you get that paycheck improves your credit utilization, it improves your credit score. So it plays into some other resolutions that we've located as well. So obviously, if you set up two automatic monthly payments from a deposit account, one for right after payday, another for a couple days before your monthly due date, that will help you avoid interest on any purchases made between your first payment and the end of your billing period.

[Charlie Turner]

Well, why don't we skip to something else since it's related to that? Jill, why don't we skip to one on the list that says make a realistic budget and stick to it.

[Jill Gonzalez]

The key word here is realistic. I think we all have pretty lofty ideas of what we're going to do money wise in 2018. But the key to this and the key to sticking to a good budget is making sure it's realistic. The best way to do that is to gather your bills from the past few months, doesn't have to be all of 2017, and then make a list of all of your recurring expenses, then rank them in order of importance. So real necessities like housing, food, health care take up the top spots. Obviously after that you can cut from the bottom of your list until your take home exceeds what you plan to spend. And then of course, it's that sticking to it part that I think gets a lot of us keep track of your monthly spending throughout the year, I would say quarterly at least, to make sure that you're actually abiding by that budget.

[Charlie Turner]

Okay, let's attack another one on the list, Jill. Repay 20% of your credit card debt. And, and I guess that assumes you have a big debt. So that would be a realistic starting point. I guess.

[Jill Gonzalez]

Yes, it assumes you have a pretty hefty debt because quite frankly, most of us do by the end of 2017. We won't know until the end of the first quarter, but we're supposedly breaking the $1 trillion mark in outstanding credit card balances alone. That's an all time record that something as a country we've never done before. And broken down, that means the average household has about $8,400 in credit card debt, more than we were seeing pre recession. So we really have to rein it in and repay a good portion of that debt. Now, looking at average incomes, looking at average debt to income ratios, and looking at that average credit card debt alone, we figure that a good 20% of your credit card Debt is should be able to be repaid by the end of 2018. So including budgeting, obviously, payment automation, things like the island approach where you use different credit card for each one of your balances. That can be done. It just has to be done strategically.

[Charlie Turner]

I'm speaking with Jill Gonzalez, who's an analyst with WalletHub, and you're listening to youo Money Matters from the Wall Street Journal. Thanks for listening, everyone. Jill, another very, very important resolution on this top 10 resolution list from WalletHub is one that advises you to add one month's pay to your emergency fund. That's good advice.

[Jill Gonzalez]

Over 50% of Americans don't have a rainy day fund. And again, just looking back at 2017, this was a huge year in terms of emergencies. Whether it's a natural disaster, whether it's losing a job or not seeing wage growth, it really is important to have something in the bank to curb any future debt you might have paying for one of these emergencies quickly when you don't have the funds to. So we recommend adding one month's pay to your emergency fund by the end of the year. Eventually fund should look like about 12 to 18 months. Take home income. That's not going to happen overnight. We recommend chipping away at it over time. And this one month's pay can be done in tandem with paying down that 20% of your credit card debt and budgeting. So it's nothing really crazy here. This recommendation should fit in with your other goals.

[Charlie Turner]

And another one on the list, Jill advises you to get an A in wallet literacy. What's that about?

[Jill Gonzalez]

Financial literacies in this country are pretty low. The US tied for 14th globally for financial literacy. That's from standard and poor, so behind other countries like Canada, the uk, Singapore, and that's something that hopefully we want to improve by the end of this year. You want to be getting around an A minus in your financial literacy. There's a wallet literacy quiz on WalletHub, and that really encompasses not only things like knowing about credit cards, mortgages, but also things like investing Basics, what loans are tied to what rates, especially as the Federal Reserve is planning on raising rates probably another two to three times. You should know how those everyday events affect your wallet. So if you take that quiz now, see what you get, and then hopefully raise that by a couple grades by the end of the year. That's something that not only benefits you, it benefits your children, it benefits your friends, anyone who has financial questions, which obviously we all do.

[Charlie Turner]

And the resolution list also advises you to improve your credit score by 20 points.

[Jill Gonzalez]

Just knowing what your credit score can do. So having that wallet know how that wallet literacy should be enough motivation for you to increase it. And we're seeing that about less than 1% of people have the highest credit score possible. That's not necessarily what we're telling you to reach, but you should be able to improve it by the end of the day 2018, by 20 points. Now, to do that, you'll really only need to do a couple of things. Maintain an open credit card account. Try not to close any even if you're not using them, because that extends the length of your credit history, which accounts for about 15% of your score and most important, which accounts for about 30% of your score. Keep up with on time payments, make sure you're not skipping one throughout the year and make sure you're not late on any. And those things alone should increase your score by 20 points.

[Charlie Turner]

And the final two resolutions on the list, Jill Gonzalez, are focus on your physical health and look for a better job.

[Jill Gonzalez]

Yes. So obviously kind of bigger picture goals. Focus on your physical health. I mean, there's such a clear connection between physical, emotional and financial health. The average person spends about $4,600 on healthcare each year. And of course, when we're talking about emergency funds, a lot of these emergencies are medical in nature. So if you build up that emergency fund, this then goes back to your physical health. Making sure that you have money for those emergencies, which then eases stress, gets back to your emotional health. There really is a clear picture between all of them. So focusing on that physical health will in turn help your financial life as well. And then finally just look for a better job. Right. Obviously easier said than done, but 2018 is going to be a great year for the job market. We're expected to hit 3.9% in unemployment. Right now we're at about 4.1. That's the lowest it's been in 17 years.

[Charlie Turner]

And job seekers have the upper hand at this point?

[Jill Gonzalez]

Exactly. Yes, job seekers have the upper hand. 3.9% would be the lowest we've seen since the late 60s. So it really is a job seekers market right now. And don't be afraid to get out there, move around. I think we're seeing people less so get up and move before they have a job than we used to see. Right now you need the job and then you can move for it. But from city to city, the unemployment rates widely vary. So Scottsdale I think has the lowest already in the 3%. Detroit has the highest still, unfortunately. Again, don't be afraid to move around in 2018.

[Charlie Turner]

Great financial resolutions, great financial goals for Americans to pursue in the new year. Wallet Hub analyst Jill Gonzalez, thanks a lot for joining us.

[Jill Gonzalez]

Anytime. Happy New Year.

[Charlie Turner]

And that's your Money Matters. Thanks for listening. I'm Charlie Turner at the Wall Street Journal.

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