For new grads and young adults just starting out, stick to the financial

Getting a grip on your financial life can feel overwhelming when you’re launching into your adult life, as many new graduates are doing now.

Most people don’t give a lot of thought to the fundamentals sooner than they need to: obtaining health insurance, paying off debt, contributing to retirement plans, building an emergency cushion, learning your credit score and improving it.

For some advice to young adults who are starting to zero in on these key financial tasks, we sat down with Beth Kobliner, a personal finance expert and author of the newly revised classic guidebook “Get a Financial Life: Personal Finance in Your Twenties and Thirties.”

For decades, Kobliner’s expertise has centered on the core ABCs of managing your money. She even taught Elmo about money on Sesame Street.

Despite having a job in hand and possibly an employer-provided 401(k) plan, the uncertainty of the economy, sky-high home prices, and the capriciousness of the market would make anyone edgy about their money decisions, let alone young adults just starting out.

Read more: 6 money moves to make in your 20s to help you get ahead

Kobliner spoke with Yahoo Finance about her advice. Here are edited excerpts of our conversation:

Kerry Hannon: What are your core financial rules for someone to evaluate their current saving and spending habits?

Beth Kobliner: My rough financial rules to know if you’re right on track, wildly off base, or somewhere in between are:

• Your debt payments (not including your mortgage, if you have one) should be less than 15% of your monthly pretax pay.

• Spend no more than 30% of your monthly take-home pay on rent or mortgage payments. This rule is something to shoot for but not really attainable if you live in a major city like New York, San Francisco, or Washington, D.C., where you might need several roommates to even come close.

• Save at least 10% of your take-home pay each month. It’s critical to think of your savings as a fixed monthly expense that’s part of your budget, just like your car payments or rent.

Realistically, these targets may not always be possible to hit, especially if you’re just starting your career, but they’re good guidelines to keep in mind.

Why is time so important to people at this stage when it comes to their money?

When you’re young, money grows exponentially if you invest even small amounts in tax-deferred retirement accounts. But you need to do it in a methodical way and save it over long periods of time. That magic of tax-free compounding, as tough as times are for young people today, is the best way to ensure you’ll have some money down the road.