One of the most important things you can do to achieve financial security is start a savings program. The rule of thumb many financial experts offer is to save 10% to 15% of your income every month. I'm actually trying to work up to saving 20% of my income each month (but we're not there yet). It's a somewhat daunting task, since we already give 10% of our income to our church. But we're trying to make the changes necessary so that we are only living on 70% of our income. The idea is to look at your individual situation and determine what works best for you.
When it comes to building your savings, there are two main things you need to focus on, if you want financial security down the road:
Emergency savings. Many financial gurus recommend that you start with $1,000 in an emergency fund, take care of things like debt and other obligations, and then work on building up your stash so that you have 3, 6, 8 or 12 months of expenses saved up. It is a good idea to have a sizeable emergency savings account. Put it somewhere that is reasonably liquid (like an online savings account with a higher yield), but that isn't too easy to get to. You don't have to try and build everything up all at once. If you can only start with putting $50 a month aside, that's what you do. At first, the important thing is to develop the habit of saving.
Retirement savings. The second thing you need is retirement savings. If you work for someone that offers a contribution match, put in the maximum. Have it automatically withdrawn from your pay check. If you can, try to get as close to maxing out your contribution every year. If you can, set up more than one account. If you have a partner, you can set up four different tax-advantaged retirement accounts: two IRAs and two 401ks. You can even add Roth versions to increase your accounts. The more money you have in tax advantaged accounts, the better.
You should be saving for retirement throughout, but once you reach your emergency savings goals, you can let the money sit there earning interest while you increase your contributions to your retirement accounts.
