1. Take care of your immediate needs first, says Orman, like putting down deposits on a rental apartment, buying basic home appliances, or paying for the down payment on a car.
2. Next, work out how to decrease monthly expenses. That usually means addressing the D-word—debt—whether it has accrued from credit cards, car loans, or student loans. "Line up your debt payments, from the highest interest rate to the lowest," advises Orman. "Pay off the bills with the highest interest rate first." (That usually means credit cards.)
3. Set up an eight-month emergency fund. To determine how much to save, calculate what you spend every month on necessities like gas, rent, utilities, and food, then multiply that figure by eight. Socking away cash in an FDIC-insured account (checking, savings, money market) means you'll be able to pay your bills if you lose your job without resorting to drastic measures like taking a credit-card cash advance or dipping into your retirement account.
4. Start saving for a house. "The smartest goal anyone could have, bar none, is to own a home sooner rather than later," says Orman, "especially given that the price of real estate has gone down dramatically in certain areas, and interest rates are still relatively low." If you intend to make a purchase within the next five years, put your money in a bank account, she suggests. Shop around to find one that pays the highest possible interest rate. "As long as it's FDIC-insured," says Orman, "it doesn't matter whether it's an online bank or brick-and-mortar."
5. Fund your retirement. Put your cash in a Roth IRA. That way, the money you accumulate over time won't be taxed when you withdraw it later on. You can withdraw your own contributions at any time without penalties or taxes, regardless of your age and how long the money has been in the Roth. (Just keep in mind that if you don't want to incur taxes or penalties for withdrawing any gains made on those contributions, they must stay in the Roth IRA until you have turned 59 1/2, and you must have held your account for more than five years.) For the 2010 tax year, you'll be able to contribute up to $5,000 yearly. After all, the best way to start your new life is by being not just young and fabulous, but solvent, too!
—Xander Kaplan, BRIDES magazine