12 Financial Resolutions For 2012

Now that another year has begun, are you ready to take control of your financial life?

These practical suggestions could help you do just that.

1. Draw up a budget. Spending more than you earn always ends badly, so resolve to learn to live within your means. Commit to a reasonable monthly plan that is neither unattainably strict nor just spending as usual.

2. Prioritize your debt. One budget item will be loan repayment, and while you may be locked into long-term commitments on a mortgage and car loans, you have much more control over credit-card balances and other short-term borrowing. To improve this part of your balance sheet, start with high-interest liabilities.

3. Review investment allocations. Does your portfolio mix of stocks, bonds, and other investments make sense in light of your financial goals, investing timetable, and ability to tolerate market ups and downs? Checking in now could be particularly important in today’s uncertain economic environment. (Just keep in mind that while asset allocation is a sound investment principle, but it won’t protect you from losses in declining markets.)

4. Boost your retirement nest egg. Being able to live well in retirement is an investing priority for most people, and the new year is a great time to increase payroll deductions for a 401(k) plan at work or to put more into an IRA. (Contributions for the 2011 tax year can be made until April 17, 2012.)

5. Set aside money for a rainy day. Could you cope with an unexpected emergency? Try to keep a cushion that will last three to six months.

6. Dust off old insurance policies. An annual review of life, home, and auto policies could help ensure that you have the right amount of coverage.

7. Incorporate estate tax changes. This could be the last year for generous exclusions from gift and estate tax liability, with an individual exemption for 2012 of $5.12 million. So talk with your attorney to get your estate plan is up to date.

8. Close unnecessary bank accounts. Banks have been ramping up fees, and if getting rid of unneeded accounts saved you $10 a month, say, investing the savings at an annual 7% rate could give you almost $12,000 after 30 years.

9. Go paperless with your financial records. Keeping track of bank and investment accounts electronically is faster and more secure.

10. Do what you love to do. What better time to resolve to trade a dead-end job for one that utilizes your skills and fuels your passions?

11. Educate yourself. The more you know about investing and other financial matters, the more likely you’ll make informed decisions.

12. Develop a plan. You’ll be more likely to keep your financial resolutions if you put them down in writing and track your progress throughout the year.

Stock Option Rules After Job Loss

It may not be the first thing you think about if you’re abruptly asked to clean out your desk, but deciding what to do about your stock grants or options could have major financial implications. And the rules are neither simple nor intuitive.

“When someone loses a job, the vesting on outstanding stock options usually stops,” says Bruce Brumberg, co-founder of myStockOptions.com, which provides information about stock grants and options. “For options that are already vested, you need to know how long you have to exercise them before they’re forfeited.”

Rules vary according to the type of stock grant or stock option involved. Some companies make grants of restricted stock or of restricted stock units, or RSUs—similar to restricted stock but with important differences. Other employers provide various kinds of options, with grants sometimes linked to length of employment or to meeting performance goals, that let you buy shares at a specified price, often during a stated time window. Vesting approaches may also vary, with some shares or options vesting gradually and others all at once (known as “cliff” vesting).


In the case of restricted stock and restricted stock units (RSUs), you generally forfeit stock that hasn’t vested when you leave the company, while you get to keep shares that have already vested. However, your employment agreement or stock plan may include a provision that protects you if you’re terminated after your company is acquired by another firm.


Performance stock or options grants are typically based on whether you achieve goals during a specified period, and if you have to leave before the period ends, you’ll lose the shares even if you would have met the objective. If shares or options vest gradually, you’ll get to keep only those that have already vested. So, for example, if you’re granted options to buy 1,000 shares of company stock that have a four-year vesting schedule, with 25% vesting each year, and you’re fired after 2½ years, you’ll get to exercise the options for 500 shares. With cliff vesting, you’ll forfeit the entire grant if you leave before vesting.


If you’re forced out, it’s crucial to review the rules about grants and options as soon as possible and to exercise options, if that makes financial sense, during a post-termination exercise period that typically lasts 90 days. If you fail to meet the deadline or to adhere to any special terms of a separation agreement, your options will expire.


Finally, if you participated in an employee stock purchase plan, you get to keep shares bought for you while you were employed, but your eligibility to participate ends with your job. The company will have to return any money withheld from your paycheck to purchase shares you didn’t receive.