Tax Myth #4: "My tax situation is OK because my BLANK (fill in blank with a family member or other "good friend") takes care of my taxes."

There are various versions of this myth. Do any of these sound familiar? "My brother-in-law takes care of my taxes." "My uncle takes care of my taxes." "My college buddy takes care of my taxes."

And of course, same problem exists with Myth #4 as Myth #3. Even when someone you know and trust does your returns, how do you know that this person is a good tax reduction specialist?

And often, many of these family members or "buddies" are not even professional tax preparers. This person just happens to be "The Family Accountant. Just like every family has one person who knows a lot about cars (or mutual funds, or carpet cleaning, or whatever), many families have someone who "knows enough to be dangerous" with regard to taxes.

And even if your "Family Accountant" is a professional tax preparer, he's probably not charging you for return. He's doing you a favor. He prepares your return; you change his oil.

My first reaction to this kind of situation (when someone is getting his/her return prepared for free) is this: You get what you pay for! When a family member does your return "for free", how much attention can he give to your need for tax reduction strategies? Probably very little.

Tax Myth #5: "My tax situation is OK because I prepare my own returns."

If this statement applies to you, then perhaps you are a "do-it-yourself-er". Money is tight and you are used to doing things yourself anyway, so why not save a few bucks each year and do your own returns?

So you've spend countless hours over years pouring over forms and instructions, trying to figure out how to do returns. And you've done OK. No letters from IRS, no audits. Hey, pat yourself on back!

And now that tax preparation software is so readily available and affordable, doing your own return is a breeze! Just key in a few numbers here and there, push print button, and presto, you've got your return done in record time! And now you can even e-file your return with your own computer.

Have you ever heard of book, "The Millionaire Next Door" (by Thomas J. Stanley and William D. Danko)?

This book describes common characteristics of millionaires in our country. My favorite millionaire characteristic is this:

Millionaires become millionaires by minimizing their taxes and getting their tax & other financial affairs in order.

Now comes "Million Dollar Question": How do you think millionaires get their tax affairs in order? By doing their own tax returns? Of course not! Millionaires NEVER do their own tax returns! They have more productive things to do with their time.

Instead, what millionaires do is spend time and money each year on tax planning and tax reduction strategies, not figuring out what number goes on which line of Form XYZ.

So my challenge to you is this: What are you going to do this year to reduce your taxable income?

Are you a believer in any of these 5 myths? Now's time to get rid of them, once and for all.

Your financial well-being depends on it.

The road to wealth is not determined by how much you earn, but by how you utilise income you have and how much you save and invest.

You need to take control of your finances. One of best ways to start having more control over your money is to find out where it has all been going, and then amend your spending habits to allow you to live within 20/80 plan.

If you write down a list of your monthly net income, then in another column write down a list of essential items that you have to spend money on. You should be able to work out an average for telephone, gas, electricity, insurances and rates, from your previous bills. Work out an average of how much is spent on grocery shopping and petrol. If there are any other necessary utilities include them as well. Then deduct second column from first - and this will give you maximum potential savings for each month.

It can be quite startling how high this figure can be and make you wonder where all extra money went.

Another good learning experience is to simply write down for a fortnight every dollar spent and write next to it what it was for. You will soon find that there are a lot of unnecessary expenses, often caused by impulse buying, where you have spent money on items that you neither needed or really wanted, and could easily have gone without.

When you can begin to recognise these areas, and start to consider whether or not you are spending your money wisely, before you hand it over, then you will be beginning to take control over your money and are well on way to embarking on your investment journey, which will enable you to have a financially secure future for you and your children.

To find money to invest for your future, you need to make sure that your outgoing expenses are less than income that you are receiving. You need to develop an excess that you can have free to invest.

Now before you start to think...."well I don't have any excess left...if I was earning more money....then I would have some free". Let me dispel this myth...and tell you that it is a known and excepted fact that amount of money that people earn has little if any bearing on whether or not they have an excess left to invest. The only way to create an excess it to spend less than you earn, instead of spending all that you earn.

Even doctors and lawyers, who earn well over $100,000.00 per year, often end up at retirement with little more Net Worth than factory or office workers.

Net Worth is calculated by deducting value of all liabilities or loans you have from income-producing assets owned to give you net value of your income-producing assets.

Why aren't high-income earners retiring wealthy? Why don't they end up with a greater Net Worth than someone on a low income? It is quite simple. Human nature seems to dictate that whatever anyone earns....they spend....some even spend more than they earn and charge it on their credit card.

The higher your income grows...the more you spend and only way to get out of this cycle is to realise that it is happening, and make a concerted effort to reverse this habit....and to begin reducing your expenditures so that you can free up money to invest.

The best way to do this, is to try 20/80 plan. This plan simply means that as soon as you receive your pay....you put aside 10% for God, 10% of it for investment....and then use other 80% to live off of. Put aside 20%, and then pay all bills and do grocery shopping....and then after that whatever is left over you can spend.

Most people do it wrong way around...they pay bills, do shopping and spend what is left over, never leaving any left to save or invest. By taking investment money out first you will alleviate temptation to spend it.

The road to wealth is not determined by how much you earn, but by how you utilise income you have and how much you save and invest.

You need to take control of your finances. One of best ways to start having more control over your money is to find out where it has all been going, and then amend your spending habits to allow you to live within 20/80 plan.

If you write down a list of your monthly net income, then in another column write down a list of essential items that you have to spend money on. You should be able to work out an average for telephone, gas, electricity, insurances and rates, from your previous bills. Work out an average of how much is spent on grocery shopping and petrol. If there are any other necessary utilities include them as well. Then deduct second column from first - and this will give you maximum potential savings for each month.

It can be quite startling how high this figure can be and make you wonder where all extra money went.

Another good learning experience is to simply write down for a fortnight every dollar spent and write next to it what it was for. You will soon find that there are a lot of unnecessary expenses, often caused by impulse buying, where you have spent money on items that you neither needed or really wanted, and could easily have gone without.

When you can begin to recognise these areas, and start to consider whether or not you are spending your money wisely, before you hand it over, then you will be beginning to take control over your money and are well on way to embarking on your investment journey, which will enable you to have a financially secure future for you and your children.

Visit authors web site at http://members.optushome.com.au/dlohrere/