I came across this article from Knight Kiplinger and thought it was very relevant for the first post of the new year. Most of the time our new years resolutions are to do with health or finances, so why not start with finances.
Key 1: Invest in yourselfYour own earning power — rooted in your education and job skills — is the most valuable asset you'll ever own, and it can't be wiped out in a market crash. Keep your earning power growing through continuous education, training and personal development. If you work in a field prone to periodic layoffs or falling earnings, think about a career change, especially if there's something else you've always dreamed of doing.
Key 2: Protect yourself and your loved onesBefore you acquire any financial assets, make sure you have enough insurance against life's big risks — serious illness, disability and early death. Most people, young families in particular, are woefully underinsured, especially for disability. When an emergency arises, you and your family will never regret having “wasted” all those annual premiums on insurance you “don't need.” (See The Basics of Insurance to learn more.)
Key 3: Borrow sparinglyUse credit only to purchase things of lasting value: a home, education, maybe a car. Pay cash for everything else such as clothing, travel, entertainment and furniture. Even better, take advantage of the credit card company's free 30-day loan by charging responsibly and paying off the bill in full every month. Do you know anyone who got into big financial trouble because they didn't borrow enough money? I don't.
Key 4: Pay yourself firstIf you feel you never have any money “left over” for investing after you pay all your bills, try reversing the bill-paying process. Make the first check you write each month a deposit to your mutual fund, money market or brokerage account. Then pay all your regular monthly bills, finishing up with the credit card bill. If you're having trouble paying that last bill, trim your discretionary spending — but keep paying yourself first.
Key 5: Don't go for the home runIn investing, as in baseball, those who swing for the fences do hit the occasional home run. But they strike out a lot too, and their lifetime batting average — average annual total return — suffers accordingly. So shy away from highly volatile stocks, Initial Public Offerings (IPOs), buying on margin and commodity trading. Don't try to time markets, because no one does it consistently well. Use dollar-cost averaging to invest regularly in markets good, bad and lackluster. Have the patience to wait out the occasional (and inevitable) bear markets.
Key 6: Diversify, diversify, diversifyWhen tech stocks were flying high in the late '90s, safer investments like bonds, CDs and less-volatile blue-chip stocks were derided as sissy stuff. Diversification was considered boring. But successful investors have always known that any one class of assets — stocks, real estate, bonds, cash — will have its day in the doghouse and its day in the sun. That's why you've got to own all of them, in a mix that's right for your age, income, family responsibilities and tolerance for risk.
Key 7: Live simply today for a more comfortable tomorrowDeferred gratification is no fun, but it's the only way I know to fund your long-term goals — college for your kids or grandkids, that vacation home you've always wanted, early retirement, a generous bequest to your alma mater. Take a close look at your current lifestyle, and if you see a lot of spending that is dispensable, consider it found money for the bigger dreams in your life (see The Invisible Rich).
Key 8: Give generously to create a better worldYour own financial security depends far more than you may think on the financial, physical and spiritual health of others in your community, our nation, our world. When you share your good fortune by donating your money, time and talent to charity, you help create a stronger economy and a healthier, safer world.
So give generously to education, your church, social-service agencies, the arts, medical research — whatever you value most. It feels wonderful, it's the ultimate in enlightened self-interest and it's the right thing to do (see Philanthropy Made Easy).

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