Every New Year is a time for reflection and renewal. Each January 1st presents us with a clean slate and a chance to make changes in our lives. This is why people make New Year’s Resolutions – whether it’s to lose weight, exercise more, improve their diet, get a new job, or tackle some long-term challenge that they’ve been delaying for too long.

If you want to make some changes in your personal finances, perhaps it’s time to consider making some New Year’s resolutions for how you relate to money.

Here are a few ideas to help make 2012 a more prosperous year:

Make some clear money goals, and write them down. Every year passes more quickly than the one before. If you’re not careful, all of a sudden it’s going to be December 2012 – will you have gotten closer to your goals, or will you just be another year older? Ask yourself, what do you most want to accomplish with your money during 2012? Do you want to save more money in 2012? Do you want to take a dream vacation? Do you want to get out of credit card debt? Do you want to start a college savings fund for your children or grandchildren? Spend an afternoon with a blank pad of paper and an open mind. Dream big. What do you most want to achieve with your personal finances this year, so you can look back with feelings of satisfaction when the year is over?
Make progress with every month and every paycheck. Let’s say your goal is to save $1,000 to take a vacation. There are 12 months in the year. So if you want to save $1,000 by the end of 2012, you need to save $84 per month. Or you can break this savings goal into even smaller increments – for example, if you get paid every two weeks, that means you will have 26 paychecks during 2012. So if you save $39 from each biweekly paycheck, you will have saved $1,000 by the end of the year. In this way, you can break down a big savings goal into smaller, easier pieces.
Play “defense” as well as “offense.” When you’re trying to improve your personal finances, you can find ways to save money (by spending less) or make more money (by selling things or earning more at a job or side gig), but most of these proactive “offensive” moves can be undone by major expenses if you’re not playing good enough “defense” by having good insurance. To defend against major expenses, take some time to review your insurance situation – health, home, auto and life. Is your employer’s health insurance plan getting worse – with higher co-payments or higher deductibles? If so, try to put some extra money into a health spending account or tax-deductible Health Savings Account (depending on what type of plan you’re eligible for – ask about it at work). Many homeowners have a decent amount of insurance on their homes, but you might also consider getting a personal liability “umbrella policy” that protects you from lawsuits and other catastrophic expenses. Personal finance is not just about saving a few dollars here and there – it’s about protecting yourself and your family from massive costs, before they happen.

The New Year is an ideal occasion to sit down and think about the “big picture” of your personal finances. Whether you want to save more money, live debt-free, or just shore up the foundations of your financial life, you owe it to yourself to spend some time planning for a happier and more prosperous 2012.

Happy New Year!