Finance professors offer New Year’s resolution advice for clients

For those who resolve to do better managing their money in 2023, Bucknell University Freeman College of Management professors Stacy Mastrolia and Curtis Nicholls, both accounting who teach personal finance, offer advice on how to make those resolutions stick.

Mastrolia first recommends systematically investing to achieve your financial goals.

"Dollar-cost-averaging is buying, or selling, an investment systematically in regular time increments — it is the opposite of 'timing the market,'" said Mastrolia. "Of course, no one knows where the stock market will be next year — or next week — but using a dollar-cost-averaging strategy to buy into an investment allows the investor to focus on regularly scheduled investing and not worry about whether the market is up or down."

That method of investing also plays well with budgeting and auto-investing, according to Mastrolia.

"That's because if a family budgets an amount of savings each month, that savings can be moved each month directly into the investment — whether it be a house fund, retirement, or college savings," she said.

She advises parents and grandparents to consider using a 529 plan to save and invest for children's educational expenses.

"While 529 college savings plans have existed since 1996, they are not extensively used by families," she said. "Of families that are saving for their children's college expenses, only 30% of savings are in tax-advantaged 529 accounts."

Mastrolia said 529 plans offer federal tax-free growth if the account is used for qualified education expenses, but most people don't realize that "qualified education expenses" include most public or private K-12 tuition, college expenses and post-high school trade school expenses

When making those finance-related resolutions, Nicholls offers these do's and don'ts:

Do make goals that are personal.

"If a goal is tailored to your personal situation, it is much more likely to be something you stick with," he said.

Do be specific in setting achievable targets.

"Having a number in mind can help us visualize the goal," he said. "However, do recognize that goals do not have to be about specific purchases, dollar amounts, or account balances. Many milestones can be achieved without specifics."

Do not compare yourself to success stories you find on the internet.

"For every 'millionaire by 30,' you find on the internet there are a million under 30 without a million!," Nicholls said. "Some stories may be inspirational, but many may leave you feeling behind. Only you know your personal situation and are best positioned to set resolutions that will improve your situation."

Do not allow the internet to set your goals for you.

"Googling Top 10 financial New Year's resolutions might provide inspiration, but again, finances are personal, and personal goals work best," he said..

On the spending side, Mastrolia sees many families overspending their monthly food budget, so she offers these cost-cutting tips:

Learn to cook your favorite foods at home to save a lot on restaurant bills.

"The average household spends $300 per month eating out," she said. "If you were able to save half of that, or $150 per month, in a separate savings account, you could have $1,800 saved by the end of the year!"

Plan meals in advance, ideally based on what is on sale that week, and stick to your list when shopping.

"Then, save time and money by doubling the recipe when you cook," Mastrolia said. "The extra meal can be frozen for a future night when you don't have time to cook or portioned into lunches for the week."

Brown bag your lunch.

"Buying lunch at work can easily cost $10 per day; bringing lunch from home can easily cost only $3 per day," she said. "Saving $7 per day can add up to $1,750 in a year. Bringing lunch from home can also be healthier because you control the ingredients."

She believes there's no time like the present to make positive financial change and commit to that 2023 money management resolution.