You and Your Money: Reaching Your Long-Term Financial Goals.

Financial freedom is the ultimate goal for most people. And many who have achieved it agree that the secret to their success is to live within your means. Ideally, that means spending less than you earn, saving some of your income and having a manageable level of debt.

Typically, consumers live a comfortable lifestyle that works for the short-term, but they haven't taken into account the amount they need to save. According to experts, most Americans should be saving at least 10% to 15% percent of their income for retirement—but many are not. The government figures for 2009 show that consumers' outstanding revolving credit rose to $744.2 billion, an increase of $17.4 billion from the previous year, while the personal savings rate dropped to a low of 1.5% of disposable income, a considerable change from a high of about 11% in the 1980s.*

Ask yourself, "Do I really need it?"

Financial analysts agree that one sure way to start saving is to differentiate between what you need and what you want; once that's decided, it's time to start making tough choices. This is crucial to getting out of debt and into wealth creation. People need food, clothing, and shelter; they want personal trainers, designer clothes, and big screen televisions. In the end, it's the bare necessities that form the basis of any budget. If you find yourself stretched thin to the extent where your long-term financial goals will be adversely affected, it may be time to sit down and examine your motives behind the spending.

How to Spend Less and Save More.

To start, get in touch with what you really want over the long term. Setting financial goals will be the key to your success. Once you've determined what you want to achieve — saving more for retirement or paying down your debts — stay the course. Be determined and remain focused on your long-term goal.

Begin by putting a stop to emotional spending. Maybe it's pressure to keep up with the Joneses or the feeling of euphoria you get when you're on a shopping spree, but either way, "retail therapy" adds up—and all too often, it leads to financial trouble. Start by carefully considering each item you buy and perhaps a "wait 24 hours" strategy. Many people find that once that cooling off period is over, they no longer want the item. When you do buy, record all expenditures. Then look through the results and ask yourself if the value of these purchases outweigh the stress of not being able to meet your long-term goals. Once you've looked at all of your purchases and identified the ones that can be eliminated, it may be time to make more challenging choices.

Use comparison sites to see if the rates they're paying for insurance, phone, and cable can be reduced. Compare rates, and consider dropping services you no longer need, such as call waiting on your phone, or extra TV programming packages. Then, make the calls to get your bills down to appropriate levels.

Once you've taken a close look at what you spend and where you can save, the course is set for long-term savings. And when you have more savings, you can begin to reap the rewards of your smart choices.