Only 68% of Americans say they can pay cash for even a $400 emergency.¹ Just $400! That means 32% of us are borrowing from family, selling stuff, or going into debt when life happens. And it does. Your car’s catalytic converter burns out. Your kid busts his chin and needs stiches in the ER. Your washing machine won’t live to spin again. That’s life. You need to be ready—with cash.

How: Start saving more money and spending less. You can save $1,000 quicker than you think—really. It just takes a little focus and some hard work. Try selling stuff, clipping coupons, saying no to extra expenses, planning your meals, eating out less, using or selling old gift cards, and downloading money-saving apps. The ways to earn or save $1,000 are nearly endless. Pick a few, and get down to saving up.

Note: Those tips also come in handy if your financial goal is to build up your savings account for any reason!

Debt’s good for one thing and one thing only: holding you back. But you don’t want to be held back. You want to thrive—and the thriving starts here. You’ve got $1,000 saved up so you don’t have to go deeper into debt when an emergency hits. Now it’s time to attack debt with a vengeance using the debt snowball method. Pay off one debt at a time starting with the smallest, gaining momentum until you’re debt-free.

How: Remember those money-saving tricks from Baby Step 1? Keep using them and put all that extra cash toward defeating debt. In fact, turn up the heat and see how thrifty you can get while you’re on this step. Then, work out ways to increase your income so you’ve got even more firepower to work with. It’s not forever, and when you’re finally free from debt, you’ll look back and see the effort was totally worth it.

The debt is gone. Bye bye. Talk to you never. Now, you’re going to beef up that emergency savings fund so it’s strong enough to stand up against bigger problems, like a job loss. Figure out how much money you’d need to live for three to six months if your regular income went away. (If you’re a one-income household, aim for six months of expenses. Two-income households can go for three.) Save up that amount, and store it in a high-interest savings account or money market account with check-writing privileges so you can get to it if you need to.

How: You’re already in a pattern of saving. You clip and tap coupons all the time. You downloaded so many money-saving apps you have to delete photos of your pup weekly for storage. You started brewing your own coffee at home—and even like it better. (Gasp.) So, keep those money-saving habits going and build your savings into a fully funded emergency fund. 

Retirement can seem like tomorrow’s problem. But that kind of thinking will leave you working for the rest of your life. In Baby Step 4, it’s time to start preparing for your future by investing 15% of your gross household income into retirement accounts.

How: Here’s the simple breakdown. When you start this step, first look into your employer’s 401(k), if they offer one, and invest up to the match. Then open a Roth IRA and invest the remainder of your 15% there. If you max out your Roth IRA and still haven’t reached 15% of your income, go back to your 401(k) and contribute the rest there!

Note: If your employer offers a Roth 401(k) and you like the investment options, you can invest your whole 15% there.

Because investing is such a big deal, we suggest finding an investment pro to help you make the right money moves. These people enjoy investment lingo but know how to explain it all in a way you can understand. They’ll listen to your preferences and help guide you on your investment journey as you set yourself up to save for the retirement of your dreams.

No kids? Kids fully grown and out of the house? You can skip this step and move on to the next. Otherwise, it’s time to start researching and stashing away cash for your kids’ education. One important note: You’ll work on Baby Steps 4, 5 and 6 at the same time, but you’ll start them in this order.

Why wait to worry about the kids until after you start saving for retirement? Well, your kids may or may not go to college—but you will definitely retire. Plus, there are plenty of ways to pay for college, including part-time jobs, scholarships and work-study programs (anything but debt). Putting your retirement first is not selfish. It’s wise.

How: First, look at opening an Education Savings Account (ESA) or 529 college savings fund.

Next, remember this: Going to college without going into debt is possible. There are tons of grants and scholarship options out there. And there’s no reason to go to a crazy expensive school just for the “experience.” To keep costs down, your kids should look at in-state and community college options first. With this Baby Step and all those smart moves, your kids can get their degree debt-free!

The average American homeowner has a monthly housing budget line of almost $1,621, including mortgage and utilities.² What if a huge chunk of that disappeared, not because of magic, but because you paid off your house—in full. You’ve stopped renting from the lending company, and that home sweet home is yours all yours. It’s nearly impossible to imagine, really. But it’s possible to achieve, really!

How: First, look into refinancing, especially if you have a 30-year or adjustable-rate mortgage. Switching to a 15-year mortgage gets you a steady payment and out of debt in half the time. Another tip is to make one extra house payment per quarter. You’ll pay off your mortgage years earlier and save tens of thousands of dollars in interest alone.

Now it’s time to grow your wealth beyond your wildest dreams—though they won’t seem as wild anymore because you’re going to reach them. And when you do, you’ll be living like no one else, and you’ll be in a position to give like no one else. Your money won’t be tied up in debt or mortgages or worry. It’ll be free to share with your favorite charities or your church. You can give like crazy—it’s the most fun you can have with money.

How: Remember your 401(k) and Roth IRA? Max. Them. Out. As your retirement fund grows, use your remaining income to have some fun and help others. Oh, and try not to break our EveryDollar app with all those zeros. Please and thank you.

Okay, after reading through that list, what Baby Step are you on? Still a bit fuzzy on that? Take our Get Started Assessment to find out! Once you know, make it your number one financial goal to jump in and knock that Baby Step out. ASAP.

When you reach the finish line of one of those Baby Steps, it’s time to celebrate. Seriously. Throw yourself a (low-cost) party! Invite friends. Create a special celebratory family dance.

When you walk one Baby Step at a time, you’re actually making big progress. And not just with your money. Your stress levels go down, and even your relationships will get better! And as long as you’re following the plan, you’ll always know the next move you need to make.