When you graduate high school and move away from home to attend college, you get a small glimpse of true freedom – but it’s only a foretaste of what’s to come. You still have people casting shade for you to rest beneath. But once you graduate, you truly enter the real world. And if you’re like most young adults these days, you aren’t properly equipped to manage your money. (It’s not your fault – nobody’s taught you!)

It takes more than a single article to equip you with all of the financial wisdom you need to successfully manage, invest, and grow your money. But the hope is that this simple post will empower you with some valuable insights that you can use to establish a strong financial future.

As you go off on your own, consider the following:

1. Tax Yourself

Taxation isn’t something you can get around. In fact, your taxes get paid before you do. If your gross earnings over a pay period are $5,000, your employer will take out the $1,000 (or whatever the exact number is) before paying you the remaining $4,000.

Here’s the thing: You don’t say, “I don’t get paid enough to pay taxes!” You pay your taxes no matter what. Yet people often say, “I don’t get paid enough to invest!” The quickest way to reverse this is to impose a tax on yourself.

If you want to invest 10 percent of your income, tell HR to automatically direct 10 percent of every paycheck into your 401(k). In this way, you treat it like another tax. You’ll find that you have to make other sacrifices to account for your lower take-home pay, but you’ll make it work. (By the way, this is the only “tax” that will make you wealthy!)

2. Develop a Cash Flow Plan

Nobody likes the word “budget” – but it’s an important component of managing money. If it makes you more comfortable, we can call it a “cash flow plan.”

A cash flow plan helps you see exactly how much money is coming in each month and how much is going out. It also shows you where the money is going. If you’ve never developed a cash flow plan, you’ll probably be shocked to learn how much money you’re throwing away for things like fast food, online shopping, or drinks at the bar.

3. Create an Emergency Fund

Did you know that just 40 percent of Americans have enough cash to cover an unexpected $1,000 expense? In other words, all it takes is a broken water heater, engine troubles, or surprise hospital visit to sink most American families. Don’t let the same be true in your life.

Before doing anything else with your money – including investing – it’s a good idea to develop an emergency fund of three to six months of expenses. In other words, if it costs you $3,500 per month to survive, you need at least $10,500 in the bank for security. This may take you a year to accumulate, but it can be done.

4. Don’t Buy a House Prematurely

Be wary of someone who tells you that renting is like throwing money down the drain. Not everyone is cut out to own a home at the ripe age of 22 or 23. In fact, this could be the worst thing you do.

The last thing you want is to buy a house and become house poor (which essentially means you don’t have any money left to do other things). If you can’t make a solid down payment on a property, you probably shouldn’t buy it.

“Although a bank might approve you for a loan that requires you to put only 3.5 percent down in cash, this isn’t a great idea for most borrowers. The lower your down payment, the higher your monthly payment,” Green Residential notes. “If you can’t put down at least 20 percent in cash, you’ll end up paying for private mortgage insurance (PMI), which instantly makes your cost of ownership more expensive.”

5. Choose Your Partner Wisely

Did you know that money problems are the second leading cause of divorce, just behind infidelity? While there are plenty of issues that cause money fights amongst couples, you can avoid most of them by choosing your partner wisely. Don’t wait until you get married to discuss finances. Tap into this hot button issue early on!

Enjoy Financial Peace of Mind

There’s something to be said for having financial stability. Money isn’t the most important thing, but it’s much easier to do the things you want if you have your finances in order. Hopefully this article motivates you to take some proper steps. If you can get a grip on your finances in your early 20s, you’ll have a huge leg up on your peers in the decades to come.

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