For better or worse, personal finance often isn’t a topic covered in school. So when you’re just starting out, budgeting for expenses, saving, investing, and managing credit can all feel a bit daunting. How do you know which moves to make to set yourself up for financial success? Well now you no longer have to guess, because we put together a list of the 6 key tips every young adult should know when it comes to managing their money.

1. Identify your financial goals.

You can’t start on the path to financial success if you don’t know where you’re going. Take the time to identify your short- and long-term financial goals. This can include things like:

• taking a vacation
• buying a car
• renting or buying your own place
• saving for your or your child’s college education
• saving for retirement.

2. Create a budget.

Now that you’ve identified your goals, it’s time to create a budget that will help you achieve them.

Free apps and online tools like Mint and NerdWallet can help with this, but you can also do it yourself with good ol’ fashioned pen and paper.

The first step to creating a budget is to list all the money that you have coming in. This includes your paycheck, money from a side gig, or any other form of income you receive. Next, track your spending. Start with all of your fixed payments — the bills you absolutely have to pay such as rent/mortgage, utilities, car payments, student loan debt, etc. After that, take a look at your last few bank statements and figure out where the rest of your money is going (these expenses are considered “discretionary”).

Once you have all of your income and expenses accounted for, compare the totals. Are you spending more than you earn? Are you carrying a credit card balance from month to month? The goal is to spend less than you earn so you have money to contribute toward achieving your financial goals.

If you’re overspending – or not saving enough to reach your goals – you’ll need to look for ways to cut back on expenses. Can you cancel unused subscriptions? Switch to a cheaper cable, phone or internet plan? Save money on gas by carpooling or taking the bus to work? It’ll take some time and discipline to get your budget in order (and stick to it!), but the benefits are worth it.

Once you have a balanced budget – ideally with a little surplus – your first step should be to pay yourself. This means saving your money by adding to your emergency fund (see tip #3) or retirement account (see tip #4).

3. Start an emergency fund.

No one wants to think about it, but a financial crisis could happen at any time – whether it’s a job loss, a reduction in income, or a big unexpected expense. Having an emergency fund to turn to can help you weather such a crisis without ending up deep in debt.

To build your emergency fund, start by putting aside a small amount of each paycheck into a dedicated savings account to help cover common unexpected expenses, such as car repairs or medical bills. If you receive a tax refund, or any incentives or bonuses, use them to pad this account. Over time, experts recommend aiming to buildup 3 to 6 months’ worth of living expenses.

4. Start saving for retirement early.

When you’re just starting out in the working world, retirement is probably one of the last things on your mind. You might be wondering why you should start saving for something that’s 40 or more years away when you’ve got more pressing goals and expenses. We’ve been there, too, so we get it. But the fact is, the earlier you start saving, the more time your money will have to grow and, thanks to compound interest, the less you’ll ultimately have to set aside on your own.

Here’s an example of how it works, courtesy of Investopedia:

Say you start contributing $100 a month to your retirement account beginning at age 25, averaging a positive return of 1% a month or 12% a year, and compounding monthly over 40 years. Your friend, who’s the same age as you, doesn’t start investing until age 55 and invests $1,000 a month for 10 years, also averaging 1% a month or 12% a year, compounded monthly. After 10 years, your friend will have saved up around $230,000. Meanwhile, your retirement account will be a bit over $1.17 million. That’s a pretty sweet nest egg!

5. Borrow wisely.

Credit cards and other loans can certainly be useful – helping you spread payments out over time so you can afford larger purchases. But they can also lead you to spend more than you can truly afford. Before you accept a credit card offer or take out a new loan, be sure to carefully consider the terms and whether you can afford to add another payment to your monthly budget. Use a financial calculator to see the true cost of a purchase once you add in interest. And shop around to make sure you’re truly getting the best deal.

6. Get a grip on debt.

Debt doesn’t have to be a dirty word, as long as its managed appropriately. When you’re creating your budget, be sure to look at your debts carefully and ensure you can make all of your payments in full and on time. Doing so can help build your credit score, which can ultimately help you achieve other financial goals like buying a home.

If your debt starts to get too big for you to handle, don’t go it alone. Reach out to your lenders to see if you may be able to refinance your debt under more affordable terms. Or consider getting advice from a financial counselor, like the ones at GreenPath Financial Wellness. Frontwave Members are eligible for free financial counseling from the certified credit and debt counselors at GreenPath. Simply call 877.337.3399 or visit www.greenpath.com/frontwave to schedule an appointment.

Want more financial tips?

Sign up for one of our upcoming free, virtual financial workshops, where you’ll get expert advice on everything from home buying to estate planning, all from the comfort of your couch!