At the Rio Olympics, the U.S. is dominating the medal counts in sports from women’s gymnastics to men’s swimming. However, while we may lead the world in many athletic contests, the sad reality is that some Americans are at the back of the field when it comes to their finances.

We are a nation that is characterized by high debts and low savings rates, with the average household carrying more than $15,000 on its credit cards and not having much of anything in the bank.

There are many reasons for this, and certain people surely have been dealt a bad hand through things like huge medical bills, the loss of a job or other hardships. But in many cases, the sad state of American finances is simply caused by bad behavior and a lack of discipline.

If this sounds like you, it’s time to start training and get on the track to success. Here are some simple steps you can take to achieve a gold medal with your personal finances.

Honorable Mention: Create a Budget

If you want to achieve any of your financial goals, it all starts with the simple exercise of creating and maintaining a budget.

Here’s the thing: You can’t ever pay down debt, save or do much of anything if you don’t know what you earn and what you spend.

If you’re one of the frugal or well-compensated few who always sees their bank account go up each month, then good for you. But for most Americans, ignorance is not bliss — it’s a recipe for disaster, and a perpetual impediment for ever getting ahead.

It’s deceptively simple, but the first step to being at the top of your financial game is to make sure you’re spending less than you’re taking in each pay period. We all have our personal trouble spots, be it $5 coffees each morning or $90 bar tabs every Saturday. That will allow you to do the tougher steps that it takes to actually get on the podium and win a bronze, silver or gold medal for your financial acumen.

Bronze Medal: Save Three Months of Salary

Getting ahead on your finances is hard enough even if things simply go exactly as planned. But it’s nearly impossible to get where you need to be if you don’t have the ability to weather the unexpected.

Let’s be honest: We all will wind up with a dead battery or leaky pipe in our lives, so we might as well be ready to face fate when bad luck strikes.

Three months’ salary is a minimum requirement for anyone — especially those making minimum wage. After all, if you work 40 hours a week for just $7.25 an hour, three months of salary only adds up to $3,500 or so. And anyone who has had to replace the transmission in their car or put a new roof on their house knows that $3,500 isn’t as much as it sounds like.

According to a recent Bankrate.com survey, about one-third of all Americans don’t even have enough in their rainy day fund to cover just $400 in emergency expenses. That’s unacceptable. So expect the unexpected and build up your rainy-day fund to ensure that whatever happens, you can stay on your path to financial success.

Silver Medal: Pay Down High-Interest Debts

After you have a nice safety cushion saved up, the next best way to get ahead financially is to pay down your high-interest debts.

Whether it’s a credit card balance, a car loan or student debt doesn’t matter. Simply look at the interest rate you’re paying and then prioritize based on who is charging you the most — then pay above the minimum required to beat down your debt load and thus beat down the interest payments you have to pay on the balance.

There are exceptions, of course, such as an old loan that is almost entirely paid off and thus not costing you too much in interest payments. But even in a case like this, zeroing out the debt to eliminate one more monthly bill can free up additional money in your budget, improve your credit score and generally improve your financial standing to take on what comes next.

Gold Medal: Grow Your Savings by Investing

If you have a good budget that allows you to build an emergency fund and pay down debts, good for you! But to truly be a champion of personal finance, you need to move beyond simply taking care of the here and now.

Consider the following two ways to save $500,000 for retirement: Save about $2,100 each month for 20 years, or put about $950 each month into an investment account for 20 years that returns roughly 7% annually.

Time is one of the most powerful tools that you have as an investor and as a saver, so put it to work for you. Otherwise, you’ll have to save in much bigger chunks later in life to build a substantial nest egg for retirement.

 

This article is from Jeff Reeves of InvestorPlace.

Copyright 2016 The Kiplinger Washington Editors

This article was written by InvestorPlace.com and Jeff Reeves from Kiplinger and was legally licensed through the NewsCred publisher network.