by Natalia Jones

Created on: March 07, 2009   Last Updated: July 26, 2010

Wealth may be defined as the vehicle that determines the scope of your immediately available choice. Put another way, a person that is wealthy can afford to do what they want to do when they want to do it. Now that the term "wealth" has been put into perspective it is easy to see the direct correlation between wealth and saving.

Many of us may have been encouraged to save as children. If you are like most people, the adolescent years, characteristic of gathering new interests and the craving for instant gratification, may have unravelled those valuable childhood lessons. We may have put down our piggy banks and picked up bad spending habits.

The good news is that no matter how far down the road you have travelled it is not too late to stop for some directions.

Mind the Gap

The first thing you need to do is mind the gap. No, you haven't been transported and you are not in the London tube. The gap I am referring to is the difference between how much you earn and what you spend. This is the amount that you have available for saving without any adjustment to your lifestyle. If this figure is negative, you need to spend some time documenting your expenses. Track everything you buy for a month and then find ways to cut back. Writing down every individual purchase is an eye-opening experience, and you will be surprised at the amount you can actually save if you make a conscience effort.

Calculate Your Net Worth

As long as you are documenting your expenses you may as well calculate your net worth. Don't be put off because you have heard this term used by bankers and investment analysts, this is not a complicated task. To begin, list all of your fixed assets. These are your tangible assets that you do not expect to sell should you need some cash, such as your house or car. Next list all of your liquid assets, such as cash at the bank or stocks. List all your other possessions, such as furniture, appliances, art or jewellery at the value you may expect to get in a sale. Add these things together and you will have your total assets. Next, list all your debts such as your mortgage, car loans, credit card balances. Subtract this from your total assets and the difference is your net worth. Calculating your net worth is useful as it gives you a snapshot of your wealth.

Set Realistic Goals 

Now that you have a clearer picture of your financial position it is time to develop your savings goals. Jot down some things you would like to achieve and attach a date to each

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