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Senior Correspondent

What happened to the American Dream? What happened to that place where it was so easy to start a business, or hold a good job, where the wind was always at your back … ?

Someone finally put a finger on it. That was Niall Ferguson in his new book "The Great Degeneration." In short, he’s shown how we’ve allowed the institutions that made this country the pinnacle of opportunity (especially entrepreneurial opportunity) to go to ruin.

• Our much-loved “Democracy” has deteriorated into nothing but political bickering.
• Our fair “Regulatory Environment” has become the tool used by unelected bureaucrats to hogtie us.
• Our “Rule of Law” has become the “Rule of Lawyers,” strangling us with too much litigation.
• Our considerate “Civil Society” has become totally uncivil.

Gone are the institutions that had grown over the centuries and that made it possible to succeed by taking a good idea, putting together a good plan, gathering up a little money and putting hard, honest work behind it.

Entrepreneurialism Isn’t Dead

It’s just much harder to earn a living than before.

Some businesses can still be started with minimum intervention, if well-conceived and well-run, especially if they’re kept to a modest size. (Once they grow to a certain size, they start being more affected by those deteriorated institutions.) Among the possibilities are internet-based businesses that primarily offer services. But you can’t run an entire economy with virtual service providers …

According to George Packer in his book The Unwinding: An Inner History of the New America, what has changed the most from last generation to this generation is the loss of certainty. We used to believe that if you held a job and worked hard, you would have a place in society, be respected and be able to offer a better future for your children. Life was relatively predictable.

Today that certainty is gone. In the absence of the old supportive institutions, people in the middle class are far more on their own. The ties that held us together as a people have loosened. There are far more winners and losers. Some people thrive in the new environment (the winners), but many don’t.

You and Your Money

So what does this mean for you and your money?

It has become more important than ever to fully engage and to take personal responsibility. Whereas there was more room for distraction or delay in the past, today we need more clarity. We need to have a clear picture of our finances, how they work, where our money is going and how it is best used so we can still build that life of comfort, fulfillment and peace of mind.

One important element is being proactive. In the past, we could have reacted to changes as they came. We didn’t have to worry too much about those changes disrupting our lives as they do today. (The sweeping disruptions that started in 2008-2009 are proof of the new economy.)

Here’s my recommendation for today:

1. Take out a piece of paper.

2. Write down answers for these questions:

• Where do I live today?
• How much do I make each month?
• How much do I spend each month?
• How much do I have saved today?
• What am I trying to build in terms of security for myself and my family?

3. Next, envision yourself two years from now, in mid-2015. Answer the same five questions.

4. Lastly, imagine that you’re five years in the future, in mid-2018. Go through the same process of answering the same questions (using today’s dollars, just to keep it simple).

If you have been living only in the moment, dealing in reaction to the day-to-day and not projecting forward, it is very unlikely you will be one of the “winners” in what’s referred to as the New America.

However, just this one exercise can start you on the path to taking control of your future … and creating for yourself and for your loved ones the security you deserve. Visualization and putting numbers on paper are that powerful.

Let me know in the comments section below if doing this exercise brought you any valuable “aha’s.”

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