Want to be financially solvent in 2020? Make this New Year’s resolution No ratings yet.

If you wake up in the middle of the night during the holidays worrying about money, you are not alone.

Nearly six out of 10 Americans live paycheck to paycheck, when the median household income was $63,179 in 2018. Many Americans are financially fragile. Four out of ten adults in the U.S. would struggle to come up with $400 in cash for an unexpected emergency, a two percentage-point increase from 2017, according to the Federal Reserve’s report on the economic well-being of U.S. households.

These adults do not have access to cash equivalents to cover the unexpected cost of buying a new refrigerator or repairing the car that they need for their job. “Even without an unexpected expense, 17% of adults expected to forgo payment on some of their bills in the month of the survey,” the Fed said.

17% of adults expect to forgo payment on some of their bills, the Fed said.

Only 49% of U.S. adults have rainy-day funds, according to the 2018 FINRA Financial Capability Study. That means more than half of adults do not have ready access to cash to cover expenses for three months in response to sickness, job loss or a recession.

With effort and perseverance, many in our nation could change from a state of financial fragility to one of financial resilience. Will you resolve to try to make this important transformation in 2020?

Here is your New Year’s resolution: “In 2020, I will always pay myself first.”

Paying yourself first means not running up credit-card debt and saving money.

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Here is your New Year’s resolution: ’In 2020, I will always pay myself first.’

Here are a few steps to help make that happen:

• Spend less than you make every paycheck.

• On average, Americans spend $500 per month on non-essentials. Learn to spot your impulse purchases — before you make them.

• Treat your credit card like a loaded gun. Charge only as much as you can pay off each month.

• Don’t use your home like an ATM. Refinancing or obtaining a home-equity loan robs you of your home savings.

• Pledge to save at least some money every month. It’s sad that nearly 7 out of 10 Americans have less than $1,000 in savings.

• Strive to raise your credit score by 100 points in 2020. A low credit score means you will pay more when using a credit card or take out loans.

• Start an Individual Retirement Account, or IRA, especially if you don’t have a retirement plan at work. If you do, maximize your contributions.

• Take a personal-finance course at the local community college, or head to the library and read books on the subject.

• If personal finance is taught at your kids’ school—make sure they take that high school elective. If it’s not, complain to the principal.

The holidays are joyful, but for many create additional financial stress. Deloitte’s 2019 holiday retail survey indicates that the average household would spend $1,496 this holiday season. This is about 2.5% of the 2018 median household’s annual income in 2018.

The average credit card balance last year was $6,605, up from $6,354 in 2017.

Americans spend a lot of money at Christmas. The winter holidays are the top consumer spending event, according to the National Retail Federation. Only back-to-school and back-to-college spending comes close to our holiday spending tradition.

Most families, according to the Federal Reserve, have at least one credit card: ranging from 61% for families with less than $40,000 in income to 98% for families with an annual income in excess of $100,000. In a recent study, Experian

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 estimated that the average credit-card balance last year was $6,605, up from $6,354 the previous year, but still down from $7,101 in 2008 just before the financial crisis.

There are families in the U.S. who likely won’t be able to pay themselves first in 2020, at least until their situation improves. But for many Americans, the stress of the holidays often stems from poor financial habits that only get worse when they overspend on gifts. This New Year’s Resolution will help prevent all of that.

John Pelletier is director of the Center for Financial Literacy at Champlain College in Burlington, Vt.

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