Most Americans believe they are financially literate, but polls show few actually are. The growing debt and the lack of retirement savings show that there is a need for financial education. April marks Financial Literacy Month, a time to remember healthy financial habits.

No matter how old you are, a solid financial plan will get you through the different stages of life. It can help you budget to buy a house, start a family, and save for your children’s college education. When developing your financial plan, consider these three important steps.

1. Manage your debt with the Avalanche or Snowball method

Household debt is at an all time high, with Americans owing nearly $ 15 trillion. From credit card debt to student loans and mortgages, every generation is affected. Americans over 50 hold 22% of all student loans – up from just 10% in 2004. Especially in times of economic uncertainty, managing your debt should be a top priority. We advise our clients who are preparing for retirement to exhaust their debt, starting with any high interest debt, such as credit card debt. Retirees live on a fixed income and any debt repayments should be factored into their budget.

There are two popular ways to tackle your debt: The avalanche method encourages you to organize your debt by interest rate. You’ll start by tackling the debt with the highest interest rate first. Once that debt is paid off, you will move to the next highest interest rate. The snowball method encourages you to organize your debts according to the amount you owe. You’ll pay off the debt with the smallest balance first, before moving on to your next smallest balance. With each method, continue to make at least the minimum payments on your other debts while you work to pay it all off.

2. Get serious about an emergency fund: here’s how

If you don’t understand what an emergency fund is or why you need it, now is the time to seriously start creating one. No matter your age or financial situation, an emergency fund is essential to your financial security. This is money set aside in an easily accessible account, such as a money market or savings account, which can be used at any time to pay for unforeseen events, such as missing a paycheck, being made redundant, or an emergency medical bill. Your emergency fund should have enough cash to cover six months of expenses. Without this safety net, many people are forced to look to credit cards or even their retirement accounts to make ends meet. Here’s why those are bad options: Credit cards have an average interest rate of almost 17%, which means you could pay that bill for months. And withdrawing from your retirement account before the age of 59 and a half can result in an early withdrawal penalty of 10% and put your future retirement at risk.

Emergency funds are also important for retirees. Health care is one of the biggest expenses facing retirees. An unforeseen medical bill following a fall or a serious diagnosis must be paid en route or at another. If you haven’t factored this into your budget, you could run the risk of running out of money by withdrawing too much from your pension fund earlier than planned.

If your emergency fund is insufficient or nonexistent, start by reviewing your budget and find areas to reduce. Set aside $ 50-100 each week. It might seem easier to put the money into a savings account you’ve already opened, but instead open a separate account that’s dedicated just to your emergency fund. This way it has a purpose and is only used in an emergency.

3. Set a goal of 15% when saving for retirement

From 401 (k) s to IRAs and other investment accounts, there are many options for saving for the future; there are tax deferred accounts, tax free accounts and taxable accounts. It’s important to understand how each one works and how it can benefit your long-term retirement plan.

Saving in tax-deferred accounts, like a traditional or 401 (k) IRA, allows you to reduce your taxable income now by contributing pre-tax money. This money will then be taxed as you retire it. The money you put into tax-free accounts, like a Roth IRA or Roth 401 (k), is taxed now, but you don’t pay taxes on your withdrawals at retirement; your money also grows tax-sheltered. Taxable accounts include your brokerage and savings accounts. You are taxed on the interest you earn, as well as any dividends or earnings.

If you don’t know where to start, start with your employer sponsored 401 (k); make sure you are contributing enough to get your employer’s full adequacy. After that, consider opening a Roth IRA to help diversify your tax liability in retirement. Taxable investment accounts are also important. Speak with a financial advisor before investing; you want to be sure that your portfolio matches your risk tolerance. Whichever combination of accounts you choose, at least 15% of every paycheque should be spent on your retirement savings.

These three steps are essential to your long-term financial security. If you haven’t already, meet with a financial advisor to put a plan in place. A financial plan will help you navigate the different stages of life. While it can help you budget for big expenses like buying a home, it will also set savings goals to achieve when planning and preparing for retirement.