Step 1: Build an Emergency Fund

After you’ve made your budget, lowered your expenses, and set realistic goals, it’s time to set yourself up in case of an emergency.  Save $1000 or one month’s worth of expenses, whichever is greater.

I would recommend putting it in a savings account, though it’s not strictly necessary; it’s just slightly harder to spend money housed in a savings account.

My checking account fluctuates pretty wildly, but I haven’t touched my savings account after completing this step, so I know it’s there whenever I need it.  That peace of mind is valuable.

Step 2: Employer-Sponsored Matching Funds