When we teach our children "Save your money," we're trying to engrain a habit that we know will serve them well when they're adults. A couple of hundred years ago, a propensity to save was considered a testament to one's moral fiber, but today, a propensity to save is a necessity. Saving gives you resources to deal with crises (from an illness or lost job to a downturn in the stock market) and -- most important -- to build wealth for your long-term goals.

With kids, saving might be oriented to something specific: a new iPod, a cellphone or a used car. Adults have different goals -- usually many goals -- and the challenge is how to prioritize them. Should you pay off a credit card or buy some shares in a stock? Invest for retirement or save for your child's education?

The thoughtful people at the Schwab Center for Financial Research (a division of Charles Schwab & Co., Inc.) set out to answer these questions rigorously, and they recently published their conclusions in the form of eight "savings fundamentals." Designed to make your saving decisions more intelligent, these guidelines can help you take the maximum advantage of your company's retirement benefits as well as existing tax breaks and interest rates:

Take full advantage of your company's match: If you participate in a 401(k) or similar plan at work and your employer offers a match, priority No. 1 is to contribute enough to get the full benefit. So if your company is willing, for example, to match 50 percent up to the first 3 percent of your salary that you contribute, you should strive to get every penny. Don't leave this money on the table unless it's absolutely necessary.

Pay off credit card debt: Priority No. 2 should be to eliminate high-interest, nondeductible debt -- in other words, credit card debt. Credit card rates vary, of course, but the national average is over 11 percent. Getting rid of that debt is an easy and powerful way to generate money for other goals. (If you have access to a home equity line of credit, you might use it to pay off your cards. Realize, though, that even though you may get a lower rate -- and the interest may be deductible -- you're not really reducing your overall debt.)

Save for the proverbial rainy day. You're getting the maximum from your company match, and you've paid off your credit cards. What next? Put three to six months of living expenses into a safe, liquid account. Your checking account is perfectly safe, but an online bank account or money market account might give you a bit more interest. Some people use a home equity line of credit as their emergency fund, but this can be a risky proposition -- especially if you ever find yourself out of work.

Max out your retirement savings possibilities. Your next priority should be to step up your retirement investment program. Contribute the maximum to tax-advantaged retirement accounts: 401(k) or equivalent plans, traditional IRAs or Roth IRAs (and don't forget the annual catch-up contributions if you're 50 or older). (If you're not sure which plan is right for you, talk to a retirement planner.) Continued...