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Getting Started

For most of us, managing our money is harder than it needs to be. We can get confused about: financial goals, asset allocation, exchange traded funds, short trades, universal life, alternative minimum tax and a whole more. A lot of people find the language of investing and money management rather daunting. You are quickly out of your element and ready to toss up your hands.

Don’t let the terms and the challenges throw you off, this is something you can do. Even doing a little is better than not doing anything. Let’s start with why people fail and what you can do to succeed. This is really the first step in financial security. You need to learn that your are not helpless, there are things you can do to improve your finances every day. That starts with having a more positive approach and a set of action plans to move your toward your goals. Change can be hard, but you can do this. Let’s start with removing some of the roadblocks.

Why People Fail and What You Can Do to Succeed

I first started writing about why people fail to succeed to achieve financial freedom more than 20 years ago. At that time a study by the U.S. government found that fully 95 percent of Americans reach age 65 were unable to retire with financial freedom. That number hasn’t changed much. I define financial freedom as freeedom from want; having the ability to travel and enjoy life and being able to afford the basics like good medical care. We can blame the government for the lack of planning and inability to properly fund social security. But realize that social security was never intended to be the sole source of retirement funds. Initially, social security was intended to provide just 30 percent of your retirement funds and with the average person living less than five years past retirement, the costs of funding your retirement was expected to be low.

We can blame our employer, after all many companies have stopped providing employer funded pensions, replacing then with employee funded plans like 401ks. Yet those employers with pension plans still in place find it difficult to fully fund the plans. It has been estimated that only about 30% of pension plans are fully funded.

People who have not gotten ahead by saving or building up assets, and now face sharp cuts in their pension realize they may need to continue working long after they planned to retire. For many young people, the idea of working for the rest of your life is pretty much standard, especially with Social Security possibly not available in the future and no guarantee of pensions.

But the real problem is your own attitudes are sabotaging your potential for financial freedom? See if any of the following statements sound like you:

“I’ll start tomorrow. Anyway, I don’t have the money to save now.”

Many of us reward ourselves by spending. In fact nearly 70% of the American economy is dependent on consumer spending, so your are bombarded with ads and messages almost requiring you to spend your money. You may be surprised to discover how much “discretionary spending” you do. Of course as so many Americans have suffered from the financial meltdown of 2008, with job loses running in the millions and millions more losing their homes, discretionary spending has dropped for all but the very wealthy. But here is the thing you should know, you may be surprised by how much more money you actually have available for savings and investing, simply by making a few changes. Additionally, if you put time and consistency to your advantage you really only need to set aside a small amount each month. Just make a financially secure future one of your priorities. Treat yourself to financial freedom for your family. Remember, the key to financial freedom is not how much you make, but how much you keep.

“I can’t look that far ahead.”

If you fail to plan, you are probably planning to fail. Don’t be part of the 95 percent of Americans that plan to fail. Be part of the ‘smart” crowd that plans for their future - now.

“I was never very good at understanding money.”

I understand this one very well, by parents never even had a savings account, were always in debt and living from paycheck to paycheck. But I learned how to manage my money, and just as you learned how to earn money, you can also learn how to manage it to your benefit. It is a simple matter of learning a few basics of money management and then consistently applying those basics so that time can work for you and not against you.

“If I’m lucky, I won’t have to think about my financial future.”

No one is that lucky, well OK, you do have a one in at least 80 million chance of winning a million dollar lottery. Do your really like those odds? Too many people are waiting for someone or something to provide their financial security. Are you willing to take that gamble?