New Year’s resolutions for your financial life

It’s time for that annual rite of passage into the New Year: making your resolutions.

In addition to vowing to lose 10 pounds or organize your photo drawer, perhaps 2012 should be the year to focus on your finances. Regardless of your age or financial status, the following ideas might help make 2012 more financially beneficial.

Twenty-Somethings

If you are fortunate enough to have school behind you and have landed a job in this challenging job market, congratulations. Now it’s time start preparing for your financial future.

Once you have a plan to repay your student loans, perhaps the most important step you can take in 2012 is to start creating a cash reserve for emergencies. Some experts recommend stashing away three to six months worth of living expenses to keep you afloat in the event of a job loss, accident or any other unforeseen situation that might affect your financial security.

Keep your cash reserves in liquid investments that will be readily available in case you need them. Consult a financial advisor who can assist you in finding investments that will hold your cash reserves and are accessible in the current low interest rate environment.

Thirty-Somethings

With all the current demands for your time and money, it’s hard to think about saving for retirement. An employer-sponsored plan like a 401(k) or a 403(b) is an easy way to invest for the future. If you haven’t started doing so already, resolve to make 2012 the year you start maximizing contributions to your company’s retirement savings plan.

If you can’t contribute the maximum right away, contribute at least enough to qualify for any employer matching contribution. It’s essentially free money that can help you take full advantage of the savings plan.

To get started, talk to your Human Resources representative or visit the plan provider’s website. You’ll want to find out how much you are contributing and whether an employer match is currently available. Keep in mind that the 401(k) contribution limit is $17,000 in 2012 — up from $16,500 in 2011. (IRS 401(k) Resource Guide — Plan Participants)

Forty-Somethings

Now that you have more at stake financially, make 2012 the year to review your life and disability insurance coverage to ensure that it reflects your current situation and your future goals. Start by asking yourself these questions:

How might unexpected events impact my family’s goals?

How will I provide for dependents if I’m unable to earn income or if I am gone?

If you are overwhelmed by the prospect of making insurance decisions, a financial advisor can help you take a big picture look at your finances and see what types and amounts of insurance make sense for you.

Fifty-Somethings

Are you feeling behind on your retirement savings? Resolving to take advantage of retirement plan catch-up contributions in 2012 can help make you feel more on track. People age 50 and older can make special contributions to their qualified and non-qualified plans over and above the regular contribution limits.

In addition to the 401(k) contribution limit of $17,000, age 50 plus workers can contribute an extra $5,500 to their qualified plan in 2012. Plus you can make an additional $1,000 contribution to your IRA on top of the normal $5,000 limit. With retirement just around the corner, you can make this the year to kick your savings into high gear.

Sixty Plus-Somethings

If you are retired and enjoying the fruits of your financial planning, it’s time to start thinking about your legacy and estate plan. If you’ve procrastinated doing so, 2012 can be the year to give yourself peace of mind knowing that you’ve secured your family’s future, and are ready to help the causes close to your heart.

Designing a legacy consistent with your values is a personal and complex process, but well worth the effort. Before the year gets away from you, set up a family estate planning meeting to open communication, prevent conflicts and let your family know what’s important to you. Then seek professional advice from an attorney, tax professional or financial advisor to make sure your estate plan is in order. Before you close the book on 2011, take a look back at what you’ve accomplished with your money and think about what you’d like to change for next year. Your financial picture is ever evolving — and it’s never too late to make changes to help ensure many happy new years to come.

Ronald Garver, CFP®, CRPC®, is a certified financial planner practitioner and chartered retirement planning counselor.