Saving is the most important step on the way to financial well-being, both in the short-term and long-term. Short-term savings can provide you with an emergency fund that you can tap in to in the event of an unforeseen, large or urgent expense. Meanwhile, long-term savings can help you accomplish goals like purchasing a house, going to college or retiring from working life.

Ideally, everyone should have more money coming in than going out every month. If you are in debt, you should immediately begin paying off your debts (especially high interest debts) before committing any money to investment or savings. Once you are free of debts, begin to build a short-term cushion in case of emergency. And finally, you can begin putting away money for long-term goals like retirement.

How much emergency savings should you keep in the bank? Well, most experts recommend keeping 3 to 6 months worth of living expenses, but this number could vary based on the number of dependents in your household and the type of income you are earning. Once you are free and clear with this amount, you can invest additional savings in stocks, bonds, or riskier places.

As a final note, it is important to remember that you should not rely on credit cards or investments to become your short-term emergency savings. Credit cards can easily put you in substantial debt while selling investments before they are due can levy significant fines.