So, this is the time of year when most of us have a desire to improve ourselves in one way or another, perhaps by losing weight or getting fitter, but one of the most effective ways to improve your life in the coming year is to take control of your finances.

The year we have just left behind was certainly tough, and there is reason to believe that 2012 will not be much easier. However, by taking control of a few areas of your finances right now, you should be able to put yourself in a good position to cope with whatever this year has to throw at you.

So here are my five top tips on the best ways to set yourself up for a fruitful 2012:

Rethink your portfolio

Last year’s rollercoaster markets are likely to have left your portfolio with more holes in than a basketball net, but if you want to improve things this year, then take action now. Look at what you have in your portfolio, which areas have done better and which have done worse, and try to do some rebalancing to position yourself as cannily as you can for the year ahead.

You might expect me to say this, but advice on this really is essential. Markets rallied at the start of the year, and if these rises are to continue, you must whip your portfolio into shape to maximise your exposure to the most likely winners for the coming year.

Look at your debts and pay down as much as you can

When things are uncertain, you want to make sure you are not in more debt than you feel comfortable with. It is not always easy to reduce your debts, but there are some things you can do to improve your position.

For example, if you have savings or investments that are earning less than you are paying in interest, then you should consider using at least some of them to reduce your outstanding debt.

Alternatively, if you have a way of raising some extra cash, such as selling items you no longer need – dare I say it, some unwanted Christmas presents – then you can use this additional revenue to help pay down debt. Remember to check whether you face penalties before you make the payments.

Think about where you can make savings

We all spend money on things we do not really need and can do without. So if you want to improve your finances this year, think about how you are spending your hard-earned cash. Cut down on impulse spending, try to think about when you are spending money because you are bored, rather than because you need what you are buying.

The classic times we do this are when you are waiting for someone who is late, or in your lunch hour, or when we are feeling down and want a quick ‘pick me up’ that for some people is provided by buying something nice for ourselves.

Try to think about other ways you can treat yourself without spending money unnecessarily. Take some time out with your family, go to a local beauty spot and simply spend some time taking in the scenery, or just relax with a good book.

Make the most of savings you make

The interest rates you can get on savings accounts at present are not great, so see how you can improve these returns. Check through your accounts to see where you are getting very low rates, then move them to higher-paying accounts.

Alternatively, if you do not need access to the money immediately, then consider investing the funds as you are likely to get better returns in the longer term.

Do not consider one aspect of your financial affairs in isolation

Taking stock of your finances does mean you need to look at every aspect of your financial affairs, and this will take a little time. But do not be put off. This is important, as the way you deal with one aspect of your finances could have a knock-on effect, whether good or bad, on another area.

You need to think about everything from your pension planning to life insurance, from your savings to your borrowing. Use your money to the best effect for you and your family to ensure your future is as secure as it can be, and to help you plan ahead.

None of us has a crystal ball, but we can all work now to hopefully improve our circumstances down the line. You need to take your financial affairs in sequence, of course, but working with an adviser now will help you to maximise your money for the year ahead.

Got a question for The Financial Guru?

Send it to us at editor@expatriatelifestyle.com and we’ll forward it on. For more financial advice, visit www.infinityfinancialsolutions.com.