1. Spend it
2. Save it
3. Invest it

The media overflows with investment advice and commentary. TV pundits, talk radio, and news specialist discuss almost exclusively the stock market, mutual funds, bonds, real estate, and to some extent hedge funds and other esoteric opportunities.

Our world of communication is filled to the brim with investment advice. So how is the primary focus on investing working? Are you feeling better about your finances today than you did 2 years ago? How about 10 years ago?

It’s doesn’t seem necessary to cite how much of a mess we are currently experiencing in our country. Bloomberg, Frontline, and Time have done special reports on the failure of the 401k concept and the exorbitant fees charges by management firms and mutual funds.

Overwhelming evidence proves the failure of the for-profit-mutual-fund industry says David F. Swenson in his book Unconventional Success.

None of this should be alarming or new. The data have been around for years, yet why do we as working folks continue to put our money at risk at the expense of basic financial principles each of us claim to know.

Let’s review the meaning of spend, save and invest.

Spend: Having a Spending Plan. Knowing where each dollar is going. The rule of thumb is to give each dollar a rule or the dollar will rule you. A Spending Plan puts the focus on cash flow.

Save:      Protected money. Zero to little risk. Checking, savings, cds, money market, life insurance, annuities (not variable), mattress (assuming your children don’t find it).

Invest:   Potential money. The potential exists for gain as well as loss. Stocks, bonds, real estate, mutual funds, variable anything, hedge funds, a member in your church who has a great tip, Las Vegas, lending it to a relative.

The Financial Planning industry has been around for decades. They specialize in investing. I recently read a short article found in Discover magazine that cited research conducted on the clients of Financial Planners.

The research found that when a Financial Planner tells a client what to do, the client’s capacity to make financial decisions becomes paralyzed. The difference between a Planner and a Coach is that a Planner tells the client what to do. A Financial Coach teaches the client not only how to make good decisions but how to accomplish what the client wants.

My take: Anytime thinking human beings abdicate responsibility for wealth and happiness to another, they get what they deserve. Very little to no effort is invested into the wealth and happiness today and therefore very little by way of return will result.

We cannot afford to continue down the path on the pursuit of prosperity focusing on the symptoms to our problems. Investing is not the solution. Putting together a sound Spending Plan and learning how to save your money will outperform investing and is the path to peace of mind and financial stability.