Carrie Schwab Pomerantz

When most of us make resolutions for the new year, we phrase them as "things to do": "I'm going to lose 10 pounds this year," or "I'm going to join a gym (and actually go)." But I'm taking a slightly different tack with my slate of 2008 resolutions.

My list includes common mistakes people make when it comes to money - and when I say "people," I definitely include myself. Let's all resolve not to make these blunders in the new year. And make sure you get through the entire list: I've saved the most important point for last.

- Spending without a budget.

A surprisingly large number of folks don't really know where their money goes. A simple budget, income on one side and expenses on the other, will give you valuable insight into opportunities to cut spending as well as boost savings. - Keeping a balance on your credit card.

Here's one of the more costly personal finance mistakes: Maintain a balance on one or more of your credit cards. Credit card debt is notoriously expensive. According to, the average standard credit card interest rate is 13.42 percent. If you can afford to pay it off today, do so. If you can't, pay more than the minimum and get that balance down to $0 as soon as possible. - Not having an emergency fund.

Remember what our parents taught us? "Save something for a rainy day." As old-fashioned as that sounds, it's a great idea for everyone to have something set aside for emergencies. A good figure is three to six months' worth of normal living expenses stashed in something very liquid and safe like a high-yield savings account. If you own a home, consider establishing a home equity line of credit; you may never need it, but if you do you'll be glad you have it. - Ignoring the necessity of estate planning.

Most people know this: If you have children, you really need to have a will. But many people wrongly assume that estate planning is the province of the very rich or the elderly. It's painful to acknowledge your mortality, but it's important to make some decisions about how your assets will be divided when you die.

Start thinking about your financial legacy - security for your spouse, education for your children, or donations to charitable causes. Get your wishes in writing with the help of a lawyer; if you are truly wealthy, enlist the professional advice of an estate planner.

- Having too little (or too much) insurance.

Insurance is a necessity of modern life, a way to hedge against risks: The potential catastrophic financial consequences of a major health issue, damage to your property, or loss of life. Most bankruptcies, for example, are caused by uninsured health problems.

Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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