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You’re not a kid anymore, and you’ve got some exciting things to look forward to. If you aren’t heading to college, you may be starting at a trade school or joining the workforce. No matter what your next step is after high school, making smart financial decisions will help you start strong. Learning how to successfully manage your money now is an essential skill that will pay off for decades — literally!

Here are nine crucial steps for financial success every young adult should master:

1. Create a Budget

Learning to live within your means and how to prioritize needs over wants are essential skills that will help you build a solid financial future. If you don’t already have one, open a personal checking account with a debit card to help manage your spending. You can use My Money Manager to easily track your income and expenses, create a budget, set savings goals, and more, or if you prefer, go old-school and use a budget worksheet. 

A simple, easy-to-use budget follows the 50/30/20 rule: Spend 50% of your after-tax (or take-home) pay on essential expenses like rent, utilities, food, and transportation costs, use 30% for discretionary spending (aka fun money), and the remaining 20% can go toward debt repayment and savings.

2. Pay Yourself First

Paying yourself first is one of the key building blocks of financial independence. Whether you’re working full time or part time (or still relying on the Bank of Mom & Dad to help pay your bills), set up a recurring transfer each payday from your checking account to your savings account. Even if it’s just $5 or $10, it will help you get in the habit of making saving non-negotiable – just like paying a bill.

3. Stay on Top of Paying Bills

Automate your finances as much as possible and use Online Bill Pay to set up automatic bill payments for your recurring monthly bills, like your car payment and utilities. That way, you’ll reduce the risk of late fees and avoid any negative marks on your credit report for an accidental late payment. You can also sign up to receive alerts and notifications for low account balances, upcoming bills, and cleared transactions, to help you stay on top of your finances in real time.

4. Establish an Emergency Fund

It’s important to have an emergency fund so you don’t have to rely on high-interest credit cards for unexpected expenses, like a broken phone or flat tire. Experts recommend having at least three to six months’ worth of expenses in your savings account. If that number seems too intimidating, break it down into smaller steps and start by saving $500, then $1,000, and so on until you reach your goal. If you get a raise at your job, try to increase the amount you’re saving each month, too. As long as you can resist the temptation to dip into your savings for non-emergencies, your savings will build up faster than you think.

5. Build Your Credit

Used responsibly, credit is a great tool to help you reach your financial goals. Good credit can lead to better opportunities, like lower rates on car loans, credit cards, and mortgages, which can help you save a lot of money on interest payments. If you don’t have a credit history yet, an easy way to start building positive credit is to open a secured credit card, and only charge one thing each month. Whether you swipe your card for a takeout order, grocery pickup, or gas station fill-up, make sure you pay your bill in full and on time every month. Establishing a good credit history can help you qualify for an unsecured card in the future.  

6. Protect Yourself (and Your Stuff)

When you’re young and invincible, it can seem like disasters are things that only happen to other (unlucky) people. But if you’re living paycheck to paycheck, insurance can seem like an unnecessary expense and you might be tempted to go without it. Don’t. It’s crucial to have adequate insurance coverage in place before you actually need it. At a minimum, make sure you have health insurance (either through your employer, your parents, or your own individual plan), car insurance if you drive, and, if you rent an apartment, renters insurance to protect your belongings in case of fire or theft.

7. Invest for the Future

When you’re just starting out, retirement can feel like it’s a million years away. But due to the power of compounding, it’s more important than ever to start saving – and investing – early to give your money enough time to grow into a healthy nest egg. With more time to save and earn, a person who starts saving for retirement in their 20s could potentially end up with almost double the savings of someone who started a decade later.

Check whether your employer offers any type of retirement plan and, if they do, whether they offer a matching contribution. If so, make sure you contribute at least enough to get the employer match, because it’s basically free money. Even if you don’t have an employer-sponsored retirement plan, you can invest in an individual retirement account (IRA) on your own.  

8. Don’t Compare Yourself to Others

It may seem like all your friends can afford to get takeout every day, buy the latest electronics, or go on lavish vacations, but remember: You don’t know what their personal financial situation is like. Don’t believe everything you see on social media – you never know if they have a secret trust fund or are drowning in debt to finance their lifestyle. Stay focused on your own personal goals and enjoy the journey to financial freedom.

9. Focus on Financial Wellness

At American Heritage, we’re committed to helping people of all ages improve their financial wellness. Check out The Learning Center, our free financial wellness center for personalized financial education. We offer free financial literacy resources on budgeting for young adults, building credit, managing debt, and other key money management topics to help you take control of your finances at every stage of your life.