"They look at all the bills screaming at them on a monthly basis and say, 'I have to pay all of those? I have nothing left. So what am I to do?'" explains Tony Ogorek, CEO of Ogorek Wealth Management in Buffalo, N.Y.
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Here's a step-by-step plan of priorities:
Create a budget
"It all starts with the 'B' word: budget," says Cheng.
Doing a budget may sound boring, but it lets you know how much money you have going out in bills each month, and, hopefully, how much cash is left over to put to use elsewhere. Tally up all your monthly expenses: rent, student loans, car payments, auto insurance, commuter fees, smart phone bill; electric and other utilities; and food.
These "essential" living expenses must be built into your budget since they're recurring monthly costs. If there's not a lot of discretionary cash left, look for ways to save. That might mean eating out less, cutting out your daily coffee fix or settling on a car that has a monthly loan payment much lower than the average of nearly $525.
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Set up an emergency fund
Stuff goes wrong in life. Cars break down. Family members get sick, creating budget-busting expenses. Ideally, it makes sense to build up at least three months' worth of bills in a rainy-day fund. But at minimum one month is a good starting point if you want to free up cash for other must-save buckets like retirement savings.
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Start saving for retirement
Getting an early start on saving is the best way to amass large sums of money. Not only does your money have decades to grow and time to ride out inevitable market downturns, it also benefits from "compounding," which allows you to earn money on the money you've already saved as well as on the gains from those investments.
With traditional pensions being phased out in favor of employer plans that require workers to sock away their own retirement savings, this is an expense that should be viewed as an investment in your future.
"Your twenties is when you really want to be forming good habits that will allow you to accumulate wealth," Ogorek says.
Investing in a 401(k) retirement investment plan at work, therefore, is the next thing to build into your budget — especially if your company offers a matching contribution. The most common match is 50 cents for each $1 contributed by the employee up to 6 percent.
"It's free money," says Ogorek. "If you put away a dollar and they match 50 cents, you just made a 50 percent return. That's one of the best deals on the planet."
Remember that 401(k) contributions are made with pre-tax dollars, which will lower your tax bill. Account gains are subject to taxes.
To maximize growth, Ogorek advises savers in their 20s to invest 100 percent of their money in stocks, preferably in low-fee index funds that track broad market gauges, such as the Standard & Poor's 500.
For 2018, the maximum contribution limit is $18,500 for anyone under 50 years old. If funds are too tight, try to at least save enough to take advantage of your employer's match, says Diahann Lassus, president of Lassus Wherley, a wealth management firm in New Providence, New Jersey. "That should be a budget priority to carve out right up front," she says.
If your company doesn't offer a match, consider investing in a Roth IRA, says Cheng. This type of account, which comes with a $5,500 maximum contribution limit for people under 50, is funded with after-tax dollars but qualified withdrawals are not subject to taxes.
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Dilemma: Pay off debt or save for future?
But what if you have big debts? What should you do first? Pay off your credit card or squirrel away money for retirement?
Experts say the best approach is trying to chip away at your debt while at the same time adding dollars to retirement accounts.
"The reality is if you have a match in the 401(k), you are still better off if you take advantage of at least some of the match, even if you're trying to pay off credit card debt," says Lassus.
Set up a disciplined plan in which you commit yourself to paying off your balance within a reasonable timetable.
Says Lassus: "You can say to yourself, 'I incurred $5,000 in credit card debt and I want to get rid of it in, say, 24 to 36 months."
A good time to reduce debt, Ogorek says, is during the waiting period before you can start saving in your 401(k). Nearly three out of 10 companies have a waiting period of at least a year, according to Plan Sponsor Council of America. What he does not recommend is only paying the minimum payment, as you will make zero headway in paying off your balance.
One reason to pay off debt sooner rather later, however, is if the interest rate on your credit card is very high, counters Steve Janachowski, CEO of Mill Valley, California-wealth management firm Brouwer & Janachowski. The national average APR, or annual percentage rate is 16.92 percent, according to CreditCards.com Weekly Credit Card Rate Report.
How to deploy remaining cash
If there's any money left over, now's the time to build regular savings that you can tap at any time for things like a down payment for a home, a future vacation or any other needs, says Janachowski. Use the money from pay raises and bonuses to fund these future needs as your career progresses.
To keep your plan on track, set up a "checklist" that serves as a financial to-do list, Lassus advises.
"Set goals," she says. "The checklist might look like this: add fifty dollars to my savings account each month; pay off my credit card by December; increase my automatic payroll deduction for my 401(k). What it does is allow you to get positive reinforcement."
Adds Janachowski: "If you don't have a plan of what you are going to do with your paycheck, you are likely to blow a lot of money."