Your 20s and early 30s are your peak saving year—laying the foundation for those “big” purchases down the road (a car, a house, a family, etc.). By creating a ”Little Budget Diary” that fits your needs, prioritizing debt, and starting early, you can have a downright luxurious retirement.

1. Break your budget into the Three E’s.

In my spending plan, I like to break down expenses into 3 E’s:

  • Essentials (spending to live now: 70 percent)
  • Endgame (spending for the future: 15 percent)
  • Extras (spending for fun: 15 percent)

Check in with your LBD (Little Budget Diary) at the end of each month and look for ways to reallocate some funds. For example, if you’re saving on gas by taking public transportation, can you move some of that money over to make a dent in your rent, or put it toward your endgame?

2. Create a spending plan you can stick to.

Budgeting does not mean having less fun. It means making conscious decisions about how you’re going to deploy your money based on how you want to live. It means more choices. When you know exactly where your money is going, you experience less buyer’s remorse because you’ve accounted for it.

However modest your paycheck might seem, develop a system to stash some of it every month. I like the automatic savings plans offered by many banks because they drop a preset amount of your paycheck into your savings account every month—you don’t even have to see it!

3. Get that debt monkey off your back—for good.

When it comes to tackling debt, I always say, “prioritize to pulverize.” Not all debt is created equal. Pay off credit cards before ANY other debt since they have the highest interest rate. Next is a car loan, followed by a mortgage, with student debt as the last to get pulverized.

Next, come up with a debt plan (like I did when I found myself in an overwhelming $5,000 of debt), start creating an “emergency fund” with six to nine months’ of savings in the bank. If you have a more precarious job (real estate agent, actor, etc.), aim for one year. This is your “break in case of emergency” fund.

4. Rethink your retirement options.

Investing in a 401(k) is not your only option. To clarify, that doesn’t mean it’s not for you; just know that you don’t have to participate if a 401(k) is offered. If your employer doesn’t match contributions, if there are high fees involved, or if the plan doesn’t come with the right investment choices for you, you might want to rethink where you put your money—look into an IRA, or individual retirement account.

With a traditional IRA, you don’t pay taxes on the money until you retire (59½ is the earliest you take it out without a penalty), the same as with a 401(k). But unlike a 401(k), an IRA is not offered through an employer; you set it up yourself, and you keep that account no matter where you work throughout your career.

5. Start saving NOW.

You know you should start saving for retirement, but you think there’s time. Well, maybe. But that depends on what kind of life you want to live when you retire. Want to take that trip to Fiji? Or are you good just doing crossword puzzles and living at your kid’s house? I’m not going to go on and on about why it’s never too early to start saving for retirement. I’ll just give you a little example.

A 20-year-old woman who puts A onetime $5,000 investment into a retirement account will have $160,000 by the time she retires. However, if she had waited until she was 40 years old to invest the same amount, she would have only $40,000 by the time she retires.

Let’s say, however, that this woman puts in $5,000 per year starting at age 20. By the time she retires she will have almost $2 million! The magic ingredient to making yourself an amazing retirement feast isn’t money. It’s time. The more time, the more your interest compounds, the more your balance rises and the more money you have to enjoy when you retire.

Remember that quote from Einstein, marveling at the power of compound interest: “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”

Embrace the genius of it.

6. Negotiate EVERYTHING.

Call your main service providers (cable, cellphone, credit cards) at least twice per year to negotiate a better rate, and always get an itemized receipt for medical bills. Make sure you are using the services you pay for (goodbye, bundle programs!), and threaten to leave for a competitor. Most providers will throw you a bone versus risk losing you as a customer.

7. Make more money!

I’m all about the side hustle. Into sports? Ref high school games on weekends. Wanna make it as a writer? Try your hand at paid online reviews or freelancing sites like eLance. Like to get your craft on? Sell your homemade jewelry on Etsy. These are great ways to indulge your passion projects while making a little extra coin on the side.