There's a reason so many Americans are short on savings and drowning in debt: They have no idea how to manage their money. If your finances are deep in disarray, it's time to get a handle on them sooner rather than later. This means understanding how you're spending money, establishing an emergency fund, and determining what financial goals you want to focus on. Here, we'll review a few key steps for getting on top of your finances.

Step 1: Create a budget

It's estimated that almost 60% of Americans fail to follow a budget, even though a budget is probably the single most effective money management tool out there. If you've yet to create a budget, the first thing you need to do is set one up immediately. To do so, simply list your recurring monthly expenses, factor in once-a-year expenses, and compare those numbers to your take-home pay. Ideally, you should come to find that you're able to save at least 10% of each paycheck while keeping up with your regular bills. If that's not the case, then you'll need to start making changes to free up more room for savings.

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Step 2: Build an emergency fund

You never know when you might fall ill, lose your job, or get hit with an unplanned expense that your standard paycheck just can't cover. That's why it's crucial to amass some emergency savings, and by that, we're talking a minimum of three months' worth of living expenses, and ideally more like six months' worth. Having emergency savings not only gives you some financial wiggle room, but can also help you avoid debt. And the less money you throw out on interest charges, the more you'll have available to help you meet other goals.

Step 3: Establish a nest egg

It's estimated that one in three Americans has no retirement savings to show for. Another key step on the road to proper money management is setting an adequate amount of cash aside for the future. At a minimum, you should be saving 10% of each paycheck for retirement, but if you're able to ramp up to 15% to 20%, even better. (Remember, we don't know what retirement costs will look like in the future, but what we do know is that historically, they've been proven to climb.)

If you work for a company that sponsors a 401(k), your best and easiest bet is to contribute a portion of your income each pay period. If that's not the case, then you'll need to set up an IRA, which you can do at your local bank or financial institution. Keep in mind that both account types are subject to annual contribution limits. If you're under 50, you can put up to $5,500 into an IRA and $18,000 into a 401(k), though the latter threshold will increase by $500 in 2018. If you're 50 or older, you get a catch-up provision that raises these limits to $24,000 ($24,500 in 2018) and $6,500, respectively.

Step 4: Save for major goals

Once you have a healthy emergency fund and get into a good savings flow retirement-wise, you can work on saving for other key goals, whether it's buying a home or starting your own business. To do so, figure out how much you'll need to meet your primary objective, and establish a timeline for getting there.

If, for example, you determine you'll need a $30,000 down payment to buy a house, and you want to get there in two years, you'll need to start setting aside $1,250 a month. Having that number in your head will help you make better spending choices going forward. Case in point: If you know you're eager to buy that home in two years, and determine that you need $1,250 a month to get there, you'll be less inclined to randomly blow a spare $1,000 on a new TV.

Step 5: Take steps to avoid debt

If you're following a budget and saving consistently, you're already doing your part to stay out of debt. But there's still more you can do. For one thing, keep reviewing your bills to make sure you're not overspending in certain places or getting in over your head with regard to new expenses. That house we talked about saving for earlier on? Make certain you can actually swing it. It could be that buying a home that's $40,000 cheaper helps you avoid credit card debt in the future.

Step 6: Be smart about taxes

A big part of managing your money boils down to limiting your tax burden. Think about it: The less you end up owing the IRS, the more cash you'll have available to save or apply toward your goals. It pays to read up on tax-saving strategies you can implement year-round, such as contributing to a retirement plan or optimizing homeowner benefits. It might even pay to consult a tax professional to make sure you're not missing out on key opportunities.

Even if you've been clueless about your finances to date, getting a handle on your money is actually a pretty simple thing to do -- especially if you follow the above steps. That said, don't be afraid to get outside help if, despite your best efforts, you're still having a hard time managing your money. You don't need to be rich to work with an accountant or financial advisor, and doing so might be just the thing to really get your finances on track.

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