Let’s face it: We are so focused on the fact that our leaders can’t seem to run a fiscally strong government that we forget that most Americans don’t know how to run the average household’s finances. This nation is almost $18 trillion in debt. Eighteen TRILLION. And while most financial “experts” agree there is a time and a place for “good” debt, there is no doubt that the average American household has gorged themselves.

This could all be resolved, and possibly avoided, if every person in America followed three simple steps to be more fiscally responsible.

  1. Needs vs. Wants

Ah, yes, the infamous “needs vs. wants” discussion. Everyone’s received it once or twice in his or her life. Maybe you’ve even given it. I know my father had it with me at the ripe age of 10. Wow, how did my father know that I would become a financial advisor and have a daily discussion with people from all walks of life about this very topic? All I know is that I’m glad he had it with me because it’s one of the first things I talk to my clients about.

Whether you are a part of the 42% of Americans that live paycheck-to-paycheck, or if you have enough money to buy God a boat, it’s one of the most important discussions to have with your significant other. I ask my clients to consider themselves if they NEED something or if they just WANT it. It seems most people have gotten out of touch about what a NEED really is.  I understand the temptation that exists in our very sales-oriented society, but you must stay strong to your principles, especially when it comes to your finances. No matter your background or your financial status, this is a very basic but sometimes forgotten rule that could change your financial outcome. Stick to it.

  1. Correct Your Debt

Plain and simple: Debt is purely a result of spending more than you make. While overall, there is a negative connotation associated with the word “debt,” as there should be, many may look back on examples of people using other people’s money to make a fortune. While you can use leverage to perpetrate a net gain in your portfolio, which can be very beneficial to long-term wealth, this is not the norm.

In fact, as of 2011, Americans had somewhere around $770 billion in credit card debt. Not good. This represents an all-time high in personal debt for Americans. Really not good.  I am even guilty of referencing credit cards in the same sentence as Lucifer himself! In all seriousness, though, the interest rates some people are paying in today’s low-interest environment are ridiculous. So stay away – very far away – from those rates. My advice: Keep to the “needs discussion” and everything should be fine. Controlling the ship in the black seas of debt can be the best and easiest way to live independent of anyone else and making it to your dream retirement.

  1. Invest in Savings

I could write a book about both saving and investing, but don’t worry; I’ll give you the Cliff Notes version. 

There is no doubt about it; you must be able to save before you even think about picking my brain about the latest or hottest stock tip.  Take a hint from Mark Twain when he said he was more worried about the return of his money rather than the return on his money.

It’s pretty sad that 34% of Americans say they have no money saved for retirement. And even harder to hear when you find out that 62% of Americans will retire with less than $25,000. The bottom line is this: Save 15% of your paycheck, no matter how much you make, and invest wisely. There are many “get-rich-quick” stories out there that people get obsessed with, so they will go as far as cashing out their retirement savings. Like I said, they’re just stories so don’t fall for them. Real, sustainable wealth is built over time, like over 10, 20 or even 30 years. NOT over months. 

Finally, when is comes to your expectations of investment results, be conservative and careful.  Don’t rely on some advisor who is feeding you some rubbish that diversification will provide with a historical rate of return of and blah, blah, blah.  Use a rate of return that matches your personality.   If you’re a risk taker and can tolerate a 2008 equity-like return, then go for it.  If not, stick with a solid investment plan that grows and protects your life savings. (They do exist.) Talk to someone who really knows and understands retirement planning.

If you’re a sports fan, we should be like the 1966 Packers under the resilient control and excellence of Vince Lombardi.  He had a plan and it was executed to perfection through his players’ hard work and dedication. Fixing the personal economies of the American people should be no different. Work with someone who can coach you excellently and put a personalized plan together. Then, it’s your turn to execute it with hard work and dedication. It’s all about priorities and you guessed it; it’s not rocket science.