The current economic downturn is affecting nearly everyone in some way, whether it's the housing crisis, loss of employment or high gas prices. Getting through the financial challenges will require greater personal discipline, most financial experts agree. Expecting the government to "bail us out" is not an option, said Somnath Basu, a finance professor at California Lutheran University and director of the school's California Institute of Finance. "We need to help each other figure out collectively what we need to do to increase financial literacy, awareness and financial health."

The first step is to act frugally, Basu said.

During the 1970s the average savings rate in America was about 7 to 8 percent per person. By last year that figure had fallen to negative 1 percent. "That means that we are spending more than we are earning," Basu said.

One out of four children borrows from parents and one out of every three parents borrows from children to pay for daily living expenses, he said.

Part of the problem is that we spend-happy consumers are hit by advertisers and marketers when we're are most vulnerable- relaxing in front of the television at the end of a long day, Basu said.

Images of Caribbean vacations and the latest vehicles and electronics bombard us at every turn.

"People want to have these things and they become a need," the professor said. "Some people say spending is good for the economy. Sometimes, yes. But saving is always good for the economy."

Spending $5 a day on exotic coffees adds up to $150 a month, Basu pointed out.

"We are not saving anything for our children like our parents did," he said.

Consumers who evaluate their budget will have a clearer picture of where they stand financially, said Marla Vasquez, senior vice president for Wells Fargo's Pacific Coast Community Bank in Santa Barbara and Ventura.

They should begin by writing down all cash, check and credit card expenditures, Vasquez said.

Several online tools are available to teach the basics of good money management, such as www.handsonbanking.org.

"It helps you look at where you spend money and how to manage it to help you make smart decisions and plan for the future," Vasquez said.

According to Matthew G. Jones, a certified financial planner with the Ed Jones brokerage firm in Camarillo, families should not allow emotions to guide their investment actions. For people with patience the stock market is poised for nice returns in three to five years, Jones said.

"Just because we went through a downturn it doesn't mean it's time to sell. Instead people should buy because prices are low," he said.

Investors mainly should try to avoid the pitfalls of greed and fear. Have a diversified portfolio made up stocks, bonds and cash, investing in large and small U.S. and international companies, Jones said.

"People are likely to chase trends, but don't follow the crowd," Jones advised.

For those laid off from jobs who need to borrow money, consider obtaining a home equity loan or line of credit as opposed to using a credit card. Rates on home equity lines are much more favorable, but tapping into home equity to build a new kitchen or take a vacation is no longer an option for some.

"Borrowing on the equity of a home that's declining in value at the same time can catch up with you," Jones said.

Owners of second homes should hold on if possible and rent those homes to help cover costs. For those who need to sell, it's better to do so sooner rather than later because housing prices may continue to slide, Jones said.

Buyers, meanwhile, should take advantage of reduced prices and historically low interest rates.

"Real estate, like all investments will come back, but it may be awhile," Jones said. "That's not the news people want to hear but it took a long time to get to this level and it won't work out overnight."

When seeking financial advice, always obtain a referral from a trusted friend or relative and be sure the adviser is certified. Certified financial planners must meet certain rigorous requirements.

The experts agree that if people make intelligent decisions, the situation will improve.

"We're not helpless," Basu said. "As a nation we have always risen in the face of adversity."