Can I install SQL Server 2012 on a machine with 2008 R2 already? I have been using SQL Server 2008 R2 for quite a while, and it is working great. Now I need to use SQL Server 2012. Will this effect my existing databases? How much risk is involved in installing SQL Server 2012 on a machine that has SQL Server 2008 R2 running?
You can simply install a new, named instance, and the two instances can live side-by-side with no risk - just be sure that your connections strings etc. are clear and correct (many problems arise from connecting to LOCALHOST when you meant to connect to LOCALHOST\OtherInstance).

Depending on resources you may want to be sure to cap both servers using the max server memory configuration option, or perhaps even only running one instance at a time. I assume this is on your local development environment.

I'd suggest abandoning the 2008 R2 version of the client tools and using the 2012 version consistently. It has much better functionality and can manage both versions seamlessly.