NEW YORK (MainStreet) — Americans who save frequently tend to be more financially confident, said several financial advisors.

American consumers often don't understand the benefits of saving regularly and starting early, said Alexander MacAndrew, an investment director at Covestor, an online investment management company with offices in London and Boston.

People should get into "sustainable" personal finance habits such as saving $3,000 per year for ten years during their twenties and allowing the proceeds to compound at 8%, he said. If an investor saved that amount until he turned 60, it would result in a greater total than saving $3,000 for the 30 years from age 30 to 60 at the same 8% investment rate.

"Compounding works in both directions," MacAndrew said. "People are often amazed by the example when they see how much an investment portfolio can increase over time if returns are left to compound."

The same strategy works for debt, he said.

"If an effort is not made to reduce debt, it can turn into a larger burden at an increasing rate," MacAndrew said. "Taking action to reduce the overall debt and not just meet minimum payments should be the primary concern."

Focusing on simply the return can create unnecessary risk, he said.

"Risk and return are highly related," MacAndrew said. "If an investment or savings product appears to offer an exceptional return, make sure you understand the risks you are taking."

Consumers continue to lack confidence in dealing with their finances with 26% of respondents in a National Foundation for Credit Counseling June online poll who said they did not want to deal with them. Only 8% said they had a good grip on their personal finances.

"People don't hesitate to call a professional when their car won't start, but are often reluctant to reach out for help when they experience financial difficulties," said Gail Cunningham, spokesperson for the NFCC. "If they are not embarrassed that they can't fix their own car, why should they be humiliated that they cannot independently resolve their credit problems? Personal finance can be complicated, thus there is no shame in admitting difficulty understanding how to best manage money."

The majority of financial counseling offered to consumers is free or at a low cost. One of the requirements for membership in the NFCC is that no service will be denied based on an inability to pay, she said. Credit counseling is not reported to the credit bureau and will not have a negative impact on a person's credit report or score.

One of the biggest misconceptions is that the easiest way to make money is to play the lottery or be a good stock picker when the easiest way to make money is to save it, said Judith Lu, a partner and managing director at Miracle Mile Advisors, a Los Angeles-based investment firm.

In many households, one of the largest monthly expenses is usually finance charges on debt, she said.

"Most people carry debt on their credit cards because it's easy and convenient, but the interest rate on credit cards is among the highest, Lu said. "When at all possible, it always makes sense to pay off debt, especially high priced credit card debt. Many people are not aware of just how high the interest rate on their credit cards is."

In today's historically low interest rate environment, it does not pay to hold cash in a bank account, she said.

"A better use of that cash is to pay down outstanding debt," Lu said.

Women in particular tend to perceive themselves as lacking confidence in managing their finances.

"This doesn't mean that women are in fact less savvy with their finances, only that they perceive themselves to be lacking in knowledge," she said. "This is exacerbated by the fact that many women delegate the management of money to their husbands, which results oftentimes in women finding themselves unprepared and lacking confidence about their personal and family finances when they need it most."

Obtaining financial literacy should begin early.

"Financial literacy is not taught in school, yet it is an indispensable skill needed by everyone in daily life," Lu said. "Furthermore, with the prevalence of technology today, kids rarely have the opportunity to learn how to balance a check book, which is one of the fundamental skills in learning financial responsibility."

—Written by Ellen Chang for MainStreet