An expert from Baylor University suggests that people should resolve to get in good financial shape in the coming year.
Dr. James Roberts has advised to focus on four savings goals in 2010, like establishing an emergency fund, Saving 3 to 6 months expenses, Contribute to the retirement account and Start your kid's college fund.
He has also advised to reduce the use of credit cards.
"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 and paying yourself first to help you attain the four savings goals," said Roberts.
Roberts says that Americans have become desensitized to what he calls the "Pain of Paying," a concept that deals with the different levels of "pain" associated with how we choose to pay for our purchases.
Cash, checks and debit cards have an immediate and "painful" impact on our wealth. Credit cards are the next less painful option, but these plastic "spending facilitators" lead most Americans to spend and buy more than necessary.
"Cash is the most painful, and I think we all understand why that is when we pay for things with cash.
"We have to have it in our pocket, we have to count it out, and when we pay for our purchase, that cash is no longer in our pocket. It's very painful and so we're much less likely to buy things when we pay with cash," he added.
He further said that the use of debit cards is better than credit cards as we have some idea that we are taking money out of an account and that money is no longer there.
Debit cards can be used for anything that credit cards are used for (on-line purchases, car rentals, etc.). But still, it's a little less painful than cash.
The ease of credit card use comes with a "buy it now, pay later" mentality that makes it the next less painful option, but there's also a major disadvantage: higher risk of greater debt.
The researchers have found that bills in fast food restaurants paid by credit card tend to be between 50-100 percent larger than bills paid in cash.