5 questions that reveal whether you're living in financial denial

In my first column, I'll discuss one of the most important issues in our lives: our future financial security.

As you read this, I want you to ask yourself how you feel about the prospects for your long-term financial future.

Do you feel confident that you've done everything required this month to be on target to reach your long-term financial goals?

If you can honestly answer yes to this question, you are truly in a small minority of people in this country. In fact, according to studies, by age 65, the vast numbers of all Americans are either dead or dead broke.

Last year, approximately two out of every three Americans over the age of 65, relied on their Social Security checks as their principal means of support. And, according to the Social Security Administration, the average Social Security check last year was just $1,384 a month.

It is not simply an illusion that it's more difficult to stay on top of things financially today than it was in years past. It's a very real concern.

What is worse, most people are living in a state of denial concerning their financial future. They are either simply pretending everything will work out OK in the end, or they tell themselves there is no need to worry about it now because they'll get everything under control in a few more years.

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Here's where I invite you to take a moment and seriously reflect on five questions to determine if you really have things under control – or whether you might actually be living in financial denial.

First, do you believe the federal government will support you in a lifestyle you deem appropriate when you are ready to retire?
If not, who is going to be responsible for accomplishing this important financial goal?
How large will your estate need to be (after calculating the full impact of inflation all the way throughout your retirement until your later mortality) so you can accomplish your retirement goals?
Do you know how much money you need to save each month to achieve this vital goal?
And have you already saved that amount this month?

You see, the painful side of this discussion is accepting the possibility that you may not be doing everything you should be doing to prepare for retirement. Or worse, you may be living in a state of denial concerning your financial future.

Now, why do so many Americans face this dilemma?

In this country, most people receive no formal education in high school or college concerning how to manage and plan for their personal financial futures.

As an example, one of my former associates was the director of one of two MBA programs on financial planning. To demonstrate how severe this lack of personal financial education really is in this country: Almost 40 percent of the entering graduate students in his program did not know how to balance a checkbook. And these were the people committed enough to seek a master's degree in personal financial planning.

Unfortunately, most people are afraid they'll appear ignorant about something as important as their personal finances. So there's a natural tendency to pretend they already know everything they need to know. Many feel almost everyone else already knows this stuff, and somehow they missed learning it when they were in school.

Being in a state of "not knowing" means you are vulnerable to being tricked or cheated.

It's under these circumstances that most people become very skeptical about other people's motives when they're offered help. Therefore, they end up doing nothing.

In personal finance, doing nothing is a good indicator of what you will have later in your retirement.

Personal financial management is a science. Certain rules must be obeyed or failures are predictable.

Becoming proficient in personal financial management requires specific knowledge. Even if you have a modest income, if you follow the right financial rules, you'll end up much farther ahead than someone who earns a high salary but doesn't manage it well.

So if the problem is lack of education, what's the solution? Obviously, it has to be education.

To break this vicious cycle, you must learn the basic fundamental principles of personal financial management. Fortunately, these concepts and philosophies are not complex. In fact, almost anyone can build a well-grounded foundation with the right information.

That's the purpose of my new column. Each week, we will explore the important rules required for you to achieve your financial goals. The goal is to empower you.

Then you can quickly gain control and have peace of mind in knowing you're doing what you need to be doing to achieve financial success.