Many young adults in their early 20s are experiencing financial independence for the first time. You are beginning to receive larger paychecks that you can spend however you want. Yet, this financial independence is coupled with newfound responsibility.

While a large paycheck can seem exciting, once rent, food, gas, insurance and other necessary expenses are taken out, the amount left is likely not as exciting. And what about savings, emergency funds and retirement? Suddenly, you don’t have as much money as you thought. However, with intentional budgeting and careful planning, your early 20s can build the foundation for financial success for decades to come.

Here are five simple steps to financial success:

Make financial goals.

Are there large purchases you want to make in the future? Do you want to buy a house in the next five years? Do you need to replace your car? Do you plan to further your education with a higher degree? Do you hope to have a family and kids one day? Setting goals and saving towards both small and large expenses can take the stress out of these future plans. When you know you have enough money to cover education costs or a down payment on a house or car (or even the total amount!), you can feel secure in your financial decisions.

Write down these goals and use that as motivation to budget and save.

Create (and use) a budget.

Keeping track of every dollar holds you accountable and helps you meet your financial goals. Just because you have money doesn’t mean you have to spend it, and with careful budgeting, you won’t have to wait until payday to buy groceries or purchase things you want.

Make a thorough list of your income and all your expenses, from rent and car insurance to streaming services and groceries. Set an amount you plan to spend in these categories each month. Add in your monthly savings goals and do the math. Does your income minus your expenses and monthly savings equal zero? Then you’re all set! If your budget is in the red, that means you need to cut back on spending. Once you create a balanced budget, use a spreadsheet or an app like Mint or EveryDollar to keep track of your purchases and stick to your financial plans!

Use this calculator to create a budget.

Use ‘fun cash’.

If you often go over budget on snacks, fast food or impulse purchases, start withdrawing a small amount of cash, such as $15 or $25, from your account at the beginning of the month. Use this as ‘fun cash’ for those small impulse buys. When you’re out of cash, wait until the next month to withdraw more, and don’t use your credit or debit card for these unnecessary purchases. This practice helps keep those small costs from adding up and wreaking havoc on your budget.

Start saving regularly.

Don’t just plan to save when you have money left over. It will be too easy to spend that money on things you will regret in the long term! Instead of spending what’s left after paying bills on coffee, clothes or other unnecessary purchases, set a monthly savings amount. You can even set up an automatic monthly transfer from your checking account to your savings account.

Start by putting at least $1,000 in an emergency fund, then begin saving towards long-term goals.

Plan for retirement.

While it might seem too early to begin thinking about retirement, your early 20s are the best time to start contributing towards retirement. Because your contributions to a retirement fund grow over time, a small amount invested early is worth more than a large amount invested later. Planning for retirement in your 20s can make an incredible difference, even compared to starting in your 30s. Don’t miss out on this valuable opportunity to establish a solid financial foundation for your future self.

Use this calculator to see how much you should save for retirement.

Use these simple steps to start your journey toward financial success! Our website offers many resources to help people of all ages as they give, save and spend.