(MONEY Magazine) – We've already discussed the importance of focusing on financial matters you can control (as opposed to those you can't, like the economy). Well, there's no element of wealth building over which you have more control than how much you save and spend. No matter what the stock market's doing or how much your boss pays you, saving money (and spending less) is something you can begin today, now.

What's more, the very process of taking a hard look at your saving and spending decisions can have a profound effect on whether you achieve your financial goals. Consider this: Recent studies by economists from the TIAA-CREF Institute and New York University have found that a willingness to plan is closely linked to wealth accumulation. "If you are the type of person who does not plan, then you end up less wealthy," says Andrew Caplin, an economics professor at NYU and co-author of the studies. T. Rowe Price financial planner Stuart Ritter puts it this way: "A lot of people think that being wealthy is a function of how much you earn or inherit. The reality is that it's much more related to your ability to understand trade-offs and make the decisions that generate wealth for you."

HOW MUCH TO SAVE Being willing to plan helps; doing it right magnifies the effect. Start by safeguarding against financial catastrophes that can undermine all your efforts--a subject we address in "Protect Yourself" on page 108. After that, figure out how much you need to save. You may have multiple goals--a new house, college for the kids, retirement--but most experts advise making retirement your top priority. After all, financial aid can help with college, but banks don't make loans to cover your golden years.

The challenge in determining how much you'll need for retirement is in predicting the future: What will your living expenses be many years from now? How many years will you be retired? And how much of your expenses will be covered by Social Security and pensions? To answer the first question, many financial planners say that you'll need at least 70% of your current income each year in retirement. That means if you make $100,000 a year now, you'll need $70,000 (before adjusting for inflation) after you stop working. But even that may not cover it; a more realistic assumption may be closer to 100%, especially if you hope to enjoy a lavish lifestyle or travel a lot.

How long will you be retired? Most of us, if we try to figure it at all, rely on life-expectancy tables. Don't, or you risk running out of money. A smarter plan is to assume a longer retirement--say, 25 years if you'd like to retire at 65--and not have to worry that you'll outlive your savings.

Finally, how much will you yourself have to come up with? Every year, the government sends estimates of your Social Security benefits based on your earnings history, or you can calculate your own estimate at socialsecurity.gov/planners/calculators.htm. And if you work for a large corporation, a private pension may provide some income. But whatever the case, you'll probably have to come up with a big piece of your own nest egg. In the end, it's a matter of adding it all up--our hypothetical $100,000 earner, for example, needs to amass a seven-figure nest egg--and starting to save now. You can find a handy tool that will walk you through all this at money.cnn.com/retirement.

In these pages we also offer a shortcut: T. Rowe Price ran some numbers for us on how much you need to put aside each year given your age, how much you've already saved and when you want to retire. The results are displayed in the charts on page 109. To keep the tool simple, a lot of assumptions are built in--that you'll need to cover half of your retirement yourself, for example. But it's a great way to get a feel for whether you're on track to a reasonably comfortable retirement--and if not, how to get there.

HOW TO SAVE MORE If you need to save more, start looking methodically at your own spending and comparing it with the spending patterns of other Americans at your income level (see page 109). There's no one-size-fits-all answer here, but by knowing where your money goes, you may be able to target things you don't really need and figure out how to pay less for those you do need. "Smart Savers" on page 107 shows how a handful of people cut their own spending with relatively little pain. For your own budget deliberations, you can apply the following general principles.

--CUT THE DEBT Some three-quarters of Americans carry some debt. (For a breakdown of how much and what kind, see page 109.) Historically low interest rates are lessening the overall impact. But there are few bigger sinkholes for savings than debt, especially the wrong kind of debt. So it's crucial that you address two key issues. First: Is your debt load simply too big? The answer is yes if it constrains your ability to save and invest. It may not be an unreasonable trade-off to, say, live on a tighter budget so you can afford a bigger home. But as a general guideline, if you're spending 40% or more of your pretax income on your mortgage, car loan and other debts, you are probably stretched too thin; look for ways to pare back. If you have a mortgage and haven't refinanced in the last 3ª years, start there. (The difference between borrowing $200,000 at 8% and at today's average rate of 5.65% is $313 a month, or nearly $3,800 a year.) Then pay down the highest-interest loans first.

Second: If you're carrying a rolling balance of credit-card debt, get rid of it. The average credit-card holder pays 13% interest. Whatever your income, rates like that can suck up your hard-earned cash pretty fast. If possible, refinance and use the savings to pay down your credit-card balance. Or consider a home-equity loan. If you don't own your home, try to pay off at least a little extra each month.

--FOCUS ON THE BIG STUFF... Cutting one small expense at a time is not the most efficient way to save. But saving 5% or 10% on a major purchase can net a nice chunk of change. Start with your home, the single biggest purchase most of us will ever make. Don't buy more house than you need just because interest rates are low. And if you refinance, be wary of drawing a lot of extra cash in the process. Homeowners are pulling so much extra cash out of their refinancings that aggregate mortgage debt has risen faster than home equity or existing home prices.

Then look at your other big purchases. If you can get by with a less prestigious but still reliable car, or even a used model, you'll save thousands in one move. And when shopping for high-end but standardized products and services, like electronics or travel reservations, avail yourself of the comparison abilities of the Web.

--...AND SMALL BUT FREQUENT EXPENSES The reason personal-finance experts always talk about cutting out your daily latte is that even small expenses, repeated frequently, add up to serious money--without your really noticing. Caffeine intake aside, focus on monthly bills (check out LowerMyBills.com to see if you can get a better deal on mobile or long-distance service) and household staples (like children's diapers or paper towels) that you can buy cheaply in bulk at Costco or Wal-Mart. Buy on sale as much as possible. Shop for generics rather than name brands when there's little difference. And keep an eye on ATM, check-writing and other such fees.