Resolve to beef up (your bank account) in 2010, says academic

(Diego Cervo)

An American academic is urging households to resolve to get in shape financially rather than physically in 2010.

Dr. James Roberts, professor of marketing at Baylor University in Texas, has suggested that consumers should focus on four savings goals in 2010 to put them on the road to financial health and wellbeing, as well as trying to limit their use of credit cards in the new year.

1. Establish an emergency fund ($2,500/€1,737)
2. Save 3 to 6 months' expenses
3. Contribute to your retirement account
4. Start your kid's college fund

Households should ensure that they pay themselves first, to attain the four goals above, before making further purchases using cash, debit or credit, advises Roberts.

"This involves creating an environment that makes it easier to not spend money, such as avoiding the malls, shopping without credit cards and only with cash, using a 24-hour cooling off period for big purchases," Roberts said. "When we pay with cash or write a check we have to count out that money or write out that amount. We don't have that benefit or barrier with credit cards."

Research from both the US and the UK in the final quarter of 2009 suggests that warnings on credit card debt and the economic downturn are beginning to influence consumer behavior. The British Bankers Association said on December 23 that British consumers were paying off debt rather than spending on plastic in November, with the amount repaid outstripping the amount borrowed and deposits up on the same period in 2008. Over the past six months British consumers have repaid £6bn (€6.65bn) and borrowed £5.7bn (€6.32bn) on credit cards.

Meanwhile, US analyst comScore has released data collected in October, suggesting that 65 percent of American consumers have changed the way they pay for products because of the recession. The research also suggests that consumers' perception of credit card companies had worsened due to changes in terms and conditions or changes in the interest rate, with 55 percent of those consumers affected by a change claiming to spend less on those cards.