by Joshua Horn

Created on: February 19, 2009   Last Updated: August 13, 2009

Saving money is the most important thing you can do financially. It brings security and peace of mind by ensuring a supply of funds when times are hard. It also allows you to live better later in life, when your savings and investments can provide an extra source of income. Even with debt mounting in this tough economy, saving money can be a very rewarding and beneficial process. There are a number of ways to change your attitudes and your habits to make your savings grow tremendously.

1) Start saving now.

Most people choose to wait to save money until their larger bills are paid off or they have a larger paycheck. However, we spend most of our lives owing money for a car or a house, and it may be a while before we make the big bucks. With this in mind, it is critical that you begin saving young, so that you can set up a security net to fall back on.

You can see the benefits of savings just by doing some simple math. Let's assume that you put away a thousand dollars every year for 10 years into a 5% interest savings account (this is high for a savings account, but many money market accounts are this high). After 10 years, you would have about 13,200 dollars, but you only paid 10,000 into the account!

To give you even more perspective, let's assume that you stop making payments into the account after the 10 years and just let interest accumulate. Let's also assume that your friend begins paying into an account identical to yours (1,000 a year with 5% interest). Twenty years later, your friend's account would be almost the same as yours at about $35,000. You only paid 10,000 into your account and let interest do the rest. Your friend had to pay $20,000 into his account over the 20 years. Saving early means you can take advantage of interest and other returns from your savings. (Imagine if you continued to add $1,000 to the account every year. After those 20 years you would have almost 70,000 in the account!)

2) Put away large sums of money.

Decide ahead of time to put away large portions of any money that isn't in your normal budget. This includes tax-returns, gifts, rebates, etc. Use a portion of the money to tackle debts you have, but make sure to save some of it and take advantage of the fact that it wasn't budgeted. Don't use it to buy yourself a new TV or some other non-essential. Instead, save it and benefit from the security of knowing you have backup money when things get tight.

3) Save by paying off debts.

While it is important to set money aside

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