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Resolve to better manage money in the new year

New Year’s resolutions based on shoring up finances are among the most common each new year. Two faculty members with the University at Buffalo School of Management shared their advice on how to make such resolutions meaningful, practical and doable.

Michael Dambra, assistant professor of accounting

Resolution: Put your money to work for you

The start of a new year is an excellent time to re-evaluate the level of cash in your savings account. It’s good to have several months of salary saved for emergency purposes, in case you have an unexpected medical bill, car expense or job loss. Savings accounts can also be used to prepare for large purchases, such as a house or new car. However, beyond precautionary and planned savings, keeping excess cash in your savings account is an inefficient use of your hard-earned money.

Typically, savings accounts provide a paltry rate of return on your assets – less than 1 percent at most major banks. This return is typically lower than the rate of inflation, meaning you’re actually losing money in real terms. In other words, the cost of hamburgers, cars and coffee is growing faster than your savings account.

Michael Dambra of UB

Instead, if you have future education expenses to prepare for, consider contributing to a 529 plan, which allows your cash to grow tax-free and generates a deduction on your New York State tax bill. Also, consider contributing some excess savings into a Roth IRA for your retirement, which allows for tax-free asset appreciation and withdrawals.

If future retirement or education savings are unnecessary, consider reducing your debt. Look up the interest rates on your outstanding obligations (mortgages, student loans, car loan, credit card debt, etc.) and pay down the obligation with the highest rate. It is better to prepay some of these obligations and reduce your future interest expenses, than let your excess savings sit idle in a bank.


Veljko Fotak, assistant professor of finance

Resolution: Improve your understanding of personal finances – and help others to do so, as well

Veljko Fotak, UB assistant professor of finance.

Since 2012, the Program for International Student Assessment has scored the financial literacy of teenagers. The results are depressing. More than 20 percent of U.S. students show “below proficient” levels of financial knowledge, and that’s with very generous grading. Adults don’t fare better: An ongoing study by the Wharton School and George Washington University finds less than half of U.S. adults can correctly answer three basic questions about interest rates and savings.

Yet, financial literacy is more important than ever. College students take on loans that will impact their economic lives for decades. Adults face more decisions as employers shift from defined benefits to defined-contribution retirement plans. Congress has added to the confusion with a rushed tax bill, and in the shadows lurks a financial industry that often preys on the uninformed.

So, in 2018, if your own understanding needs a refresher, make time to review the following resources. And, if you’re on top of this ever-changing financial landscape, discuss personal finance with your kids, or volunteer to teach a financial literacy course in your community.

1. Federal Deposit Insurance Corporation: The FDIC offers Money Smart, a free collection of material accessible online, with customized programs for youngsters, adults, seniors and small businesses.

2. Financial Literacy and Education Commission: Made up of more than 20 federal entities, the commission recently opened its new website, While some material targets younger audiences, it offers interesting tips: Should you be buying bitcoins? What should you do about the Equifax data breach?

3. National Education Association and the Jump$tart Coalition for Personal Financial Literacy: These organizations targeting precollege students and offer a wealth of reading material online.


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