Darcy K. Houghton: 5 steps to a better financial legacy

The new year has arrived. and it's time for resolutions. From a financial legacy perspective, what resolutions do you have for 2012? Below, I have listed my top five actions that each, if taken today, will have a lasting impact on your financial legacy.

First, develop or revisit your budget; are you making more than you are spending? Especially if you do not know the answer to this, a budget, as painful as it may be to create, can really help you begin to develop some financial discipline.

Second, revisit your insurance - specifically, look at your disability, long-term care and life insurance needs, and compare your needs to your coverage. Are your loved ones protected in the event that your income disappears? Also, consider your insurance needs in an era of increasing income and potentially rising estate tax rates (I have frequently advised my clients that insurance will never be less expensive than it is today).

Third, start or increase the rate at which you save. Start with a basic savings account (for emergencies). Once your savings account is full enough to offer a buffer, add an IRA or start investing in your retirement plan at work. If you are already on this path, consider investing an additional 1 percent or more into your plan. The power of compounding will allow your early contributions to really jump-start your retirement savings.

Fourth, meet with your financial adviser and confirm whether or not you are on track for your retirement or other legacy goals and, if not, revisit actions one through three above.

And, of course, fifth, develop or update your estate plan. By working with your estate planning attorney, you can assure that the legacy you pass works as you wish. Make sure that you have appointed the proper decision-makers to care for you or your loved ones at such time that you cannot.

You have probably heard the above top five before. Maybe you are thinking. "I would love to do those things but don't know where to start." Rarely do any of us do this without a coach, counselor or advocate. Financial advisers and accountants help many of us. Also, many churches and employers offer financial planning classes, and there are always books, DVDs and other training tools. Take the time to start preparing for your future and the future of your loved ones - utilize these top five financial actions as the cornerstone to the financial legacy you provide for your loved ones.

• Darcy K. Houghton is a resident of Carson City and works in trust and wealth management with Whittier Trust and is Of Counsel to Houghton Jones (www.hou2plan.com).