By Jim Poolman

It’s no secret that most resolutions don’t last very long into the New Year. In fact, less than two thirds of them make it past the first month!

Among the hardest to keep are our financial resolutions, but that doesn’t necessarily stop us from making them.  According to the 2013 Fidelity Resolutions Study, the number of people making financial resolutions is at an all-time high and almost half of the survey respondents reported achieving over 80% of their financial goals last year.

So what is the secret to success? Setting realistic and attainable goals is key to ensuring that you make good on your resolutions long after everyone else has thrown in the towel.  Here are some suggestions that can put you on track in 2013, from Ron Grensteiner, President of American Equity Investment Life Insurance Company:

• While it may be tough to do in today’s environment, having 3-6 months of expenses in a savings account for emergencies can be achievable by putting away a small percentage of each paycheck before any other spending.  If this money is available, it can prevent you from acquiring additional credit with high interest rates or removing money from illiquid accounts where they may incur early withdrawal penalties or tax consequences.

• Taking advantage of 401(k) company matches can boost your retirement savings at no additional cost to you.  Some companies will match 50-100% of the employees’ contributions up to a certain maximum as dictated by the company’s plan.  It’s free money. Take advantage of it if you can.

• Start sooner rather than later and establish a 529 Plan for children’s or grandchildren’s college fund.  Depending on what state you live in, you can possibly deduct your contribution from state income taxes up to certain limits.  Plus, if the money is used for secondary education, principal and interest can be withdrawn tax-free.

• Invest after-tax income into traditional or Roth IRAs. The amount you can invest varies based on whether you have an employee sponsored retirement plan. If you choose this option, a fixed annuity can be used to fund traditional and Roth IRAs, as it’s important to protect your money long-term and ensure that you have guaranteed income at retirement.

• Pay off – or down – outstanding credit card debt. By making minimum payments, you could end up paying back double the amount you borrowed and the longer this takes, the less time you have to save for retirement. Here’s the theory with paying down your debt:

Typically if you pay more in interest than you can earn, you want to reduce your debt levels.  However if you earn more interest than you pay in debt, it can be healthy to have some debt in order to free up cash to earn a higher rate than you are paying.  For example, if you are earning 1% interest on your savings, but paying 7% on your debt, it makes sense to use available cash to pay down your debt.  Once your debt is extinguished, put your money to work in a principal protected fixed annuity.

• Buy life insurance with a guaranteed purchase option.  The younger you buy life insurance, the cheaper your premiums, and permanent life insurance builds cash value which you can make tax-free loans against.  With the guaranteed purchase option, you can also increase your coverage in the future, regardless of health status.

Have a happy and prosperous New Year!