Happy new year guys. 2012 is here and I can't begin to tell you how syked up I am for this year. We at the Money Academy promise to keep you more and more informed about all that is happening in the financial world, giving you all the financial tips that will make you money smart. As we say here at the Money Academy: Money talks, so shut up and listen. Making you money smart is our business.

To start us off we've compiled a list of 12 financial resolutions for 2012 that we are sure you'll find very useful and informative. The news is filled with stories about 2012 predictions, resolutions, and the like, so we've felt compelled to chime in.

12 Financial Resolutions for 2012

1) Set goals.

As Stephen Covey put it in The Seven Habits of Highly Successful People, begin with the end in mind. After all, it’s hard to know how to get to where you want to be if you have no idea where that is. There's no better way to begin the year than by asking yourself what you really want, what steps you need to take to achieve those goals, when you’d take those steps, and what they would cost you. Most importantly, write it down to hold yourself accountable and make them more likely to actually happen.

2) Plan for the Future

It you've never taken the initiative of planning for the future in the past, this don't repeat the same mistake this year. Don't gamble with life, you never know when those unexpected expenses will creep in. Save up for a rainy day, take a medical insurance cover and most importantly write a will. You don't want your family to start fighting over what you've left behind when you pass on. You can use software or a template to write up your will if your situation is relatively simple but you may still want to have a lawyer look it over. For more complex situations, you’ll definitely want to hire the services of a qualified attorney.

3) Check your credit.

Like most people you've most probably been using your credit cards all over the place during the festive season so keep an eye on your credit card statements for any purchases you didn’t make. If you have not been checking on your credit for the last 12 months then its best to start now. 70% of credit reports have errors, am sure you don't want to pay for expenses you didn't actually incur.

4) See where your money is going.

Now that you’ve thought about your hopes and fears for the future and gotten glimpse of your past through your credit report, this is where we see where you are now. Take a look at your last 3 months of bank and credit card statements then categorize your expenses on a worksheet. This will give you an average of your monthly expenses. You don’t want to include all your recent holiday binge shopping though. For non-monthly expenses like gifts and vacations, figure out how much you tend to spend on them per year and divide that number of 12. It might be a good idea to then set that much aside each month to cover those expenses as they arise. This could help you decide how much you can really afford to spend and avoid ending up in a financial hangover every January as it is the case with most Kenyans.

5) See where you can cut back.

Once you know where your money is going, try to think of ways you can reduce some of your expenses to spend less than you earn every month and save for your goals. Ask yourself if there are ways of doing the same thing while spending less money. How about taking a cheaper Satellite T.V subscription, am sure there those channels you paid for but never got to watch. Can you bring lunch to work instead of eating out every day? Do you really need to pass by Java or Dormans every morning?

6) Make sure you have the right amount of insurance.

You want to have enough disability insurance to cover your necessities and enough life insurance to provide for anyone dependent on your income. Don’t forget to check what you have available through you and your spouse’s employer. This is also a good time to examine your health and property and casualty insurance coverage too.

7) Build an emergency fund.

There are always those expenses that come when we least expect: like the car breaking down or those unexpected costly medical expenses that can leave you financially wounded. That’s why it’s so important to have some cash somewhere safe and accessible like in a savings account. Try to save at least 2,000 Kshs and ideally 3-12 months worth of necessary expenses in case you or your spouse were to lose their job. Always remember, the riskier your income is, the more you should have in savings.

8. Save that Change.

Collect Your Change. Any time you make purchases with cash, only spend whole shillings amounts. If you go to the Shop and your bill comes to 81 Shillings pay 100 shillings in cash and pocket the change. The first thing you should do when you go home is throw the money in a large container, empty water jugs are perfect. If you adhere to this policy and don’t spend any of the change, you are likely to save several thousand shillings over the course of a year.

9) Prioritize Your Debts.

Not all debt is created equal. Make a list of your liabilities and organize them by the annual interest rate. Those with the highest rates, most likely your credit card debt, should be paid off immediately. It does no good to invest money while you are paying 19% or more each year. Some debt is “good” debt. A debt is “good” if it brings you income. If you buy a rental property, you’re paying a mortgage, but that’s considered a “good” debt because you’re getting passive income from the rent payments.

10) Give Money.

One of the most effective ways to realize the value of money is to give it. The next time you get your paycheck, take five percent of your salary in cash, the cash in your pocket will make it seem far more real than if you simply wrote a check or used a debit card. Walk into a coffee shop and anonymously pay for the other customers in line. It is a powerful and effective way to change other people’s lives for the better while giving you a better sense of freedom financially. Suddenly, you realize just how much promise 200 shillings contains.

11) Read a Financial Book Each Month.

If you want to learn to cook, you read cookbooks. If you want to learn to fix an engine, you ask someone to show you. The printed word is amazing in that it allows you to communicate directly with the most brilliant financial minds of the past century. A great recommendation for your first financial read of 2012 is The Retirement Savings Time Bomb . . . and How to Defuse It by Ed Slott (January 2012, Viking Adult). Or you could better read our money posts every day, we promise to keep you more and more financially informed every day.

12) Make sure your investment portfolio is properly diversified.

In addition to saving money for retirement, education, and perhaps other goals, you’ll still need to decide how that money is invested. Rather than try to predict the market, you can research for guidelines on how much to invest in stocks, bonds, and cash based on how long the money will be invested for your goals and how comfortable you are with the ups and downs of the market. You would then re-balance your portfolio periodically to keep it in line with your strategy. This can also help you resist the temptation to buy stocks when they’re doing well (priced relatively high) and sell stocks when they’re doing poorly (priced relatively low).

There are quite a few steps here to choose from and not all of them will necessarily apply to you but taking even just one or two of these steps can help put you in a better financial position. Do all 12 and the only thing you may have left to work on is sticking to your diet and getting back to the gym. These don’t seem so bad now, do they?

From we at the Money Academy: Its happy new year. Remember to always be money Smart.