Have you ever heard, "If you don't know where you're going, you'll probably end up somewhere else?"

It's good to make plans and set financial goals for yourself. Imagine the house you want to live in, the dream vacation you'd like to take, or things you'd like to do in your retirement years. That's where saving and investing come in.

People save money for long-term as well as short-term goals and emergencies, like car repairs or a new washing machine.

Savings are usually about short-term goals and are best kept in what are called cash reserve assets. These are "liquid assets" because you can easily get at your money.

For example, cash is a liquid asset, but a house is not. If you buy a six-month T-bill, that asset is not liquid because you will have to pay a penalty to get at your money before the six months is over.

If you have ever wondered whether saving is really worth it, take a look at what saving just $10 each month can do for you. If you could save $10 a week, these numbers would be four times larger:

The best way to build your savings "nest egg" is to think of savings as an expense. When you pay bills, write your first check to savings. A rule of thumb is to pay yourself 10% of all your income first before any other bills.

Most financial experts say to put aside between 5 to 10% of your salary until you’ve saved three to six months’ worth. That way you'll use your savings in emergencies and won’t have to borrow money or pay interest on credit cards and loans.

Savings accounts are a safe place to put your money because they are insured up to $250,000 each by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).

These accounts usually pay a small amount of monthly interest, do not require a minimum balance or have penalties to use the money.

Money market accounts and certificates of deposit (CDs) will earn more interest than savings accounts, but they are not as liquid and usually require a minimum amount of money to put into them. In most cases, CDs/share certificates and money market accounts held with a credit union or bank are also FDIC- or NCUA-insured.

Certificates, savings accounts and money market accounts are good places to put money aside. Once you have set aside three to six months’ worth of your salary, you can start investing.

Investing is usually about long-term goals like retirement or paying for college. Because your money is actually earning money for you, investing is a way to build wealth.

What matters most is not how much you invest, but that you do invest. It can be scary to plunk down a large amount of money all at once. It may be easier for you to invest gradually with a smaller amount over time. If you invest a set amount each month and buy the same stock or mutual fund, you will reduce your risk of investing.

One advantage to regular investing, called dollar-cost averaging,is that you may end up buying more shares over time than you would have if you had invested all at once. It may also turn the normal ups and downs of the stock market in your favor, too.

The key is to invest aggressively enough to stay ahead of inflation, while still managing the risk associated with your investment. Let's say inflation is at 4%. If you stashed $1,000 under your mattress and took it out in 5 years, that $1,000 would only be worth $822 thanks to inflation.

If instead, you put $1,000 into a CD that earns 3% interest, you'd be doing better, but you'd still be on the losing end because at 4% inflation, you would lose 1% of the purchasing power of your money.

So the answer is to stay ahead of inflation by finding investments that will (hopefully) earn more. And with savings and investing, let the power of compounding interest work for you by accelerating your rate of return.

There are many kinds of investment assets, including mutual funds, stocks, bonds, real estate, futures, options and tax-deferred investments like Individual Retirement Accounts (IRAs) or 401(k)s.

Some of these carry a lot of risk, and some are almost as safe as savings accounts. You could also invest in small start-up businesses, natural resources like oil, foreign currencies, precious metals and diamonds.