This is a big mistake and many people make it; believing that savings are only about retirement. Retirement planning is important but it is not the only or the most important reason for saving.

The benefits of saving are often hard to value when it all seems so far away in the future. Here is the reality - people with savings have choices. Not having savings often leads to debt spending. Debtors are owned by their creditors, chained to their jobs to obtain money to cover debts. If they fail, they know they face a world of financial pain and money worries.

For those with savings, there are no such financial worries, just choices and that is what financial freedom really is. It is the ability to make choices unrestricted by financial constraints.

Saving is as much about living fully now as it is about future financial security. Living free of debt and with savings is a financial state that enables you to live life to its fullest potential. It is the key to financial freedom and prosperity.

Even now I can hear many readers of this article complaining that it is all very well talking about savings but in the real world it's a struggle to make ends meet and saving money is just not realistic.

Let me tell you now - anyone who truly desires to live this way without debt and with savings to fall back on, can. It is a simple life choice. The amount of income you have is not important; research has shown that the ability to save bears no relation to disposable income. Equal results can be obtained across all income brackets - which means that you can do it - if you want to.

Simple changes in behavior and spending habits can reap huge savings, often accompanied by an improved life-style. It is amazing how simply taking the time to re-examine and adjust your life patterns can not only result in big financial savings but also wonderful life improvements.

The ultimate goal of this process is to stop living in debt - no more credit card debt, no debt of any kind other than maybe a mortgage. To achieve this you need to leave behind the "buy now, pay later" ethos and replace it with a philosophy of only spending what you can afford on things you really want and need. Making financial choices that prioritize your financial well-being over short-term gratification is part of the positive process of change needed by all who choose this road to financial success.

Savings can be divided up into three basic types.

Long-term retirement saving, this is usually a one-way street into something like a 401(k) where there are tax perks and penalties for early withdrawal.

Short-term savings are to cover anticipated expenditure such as insurances, house maintenance, mortgage payments etc. Predict and budget for these in your personal budget.

Medium-term uncommitted saving is sometimes referred to as a "Freedom Account". This is money saved that is accessible within 3 months. Use this for unexpected contingencies and to give you the freedom to dip into the fund to pursue life goals. This is your contingency money against disaster and your ticket to your dreams.

Remember, there is no point in saving if you have debt (exclude your mortgage), pay off your debt, keep paying down debt and don't stop paying off debt until there is no more debt and then start building your savings.