Pay off student loans or save: Which comes first?

Aim to put away at least 10% of your annual income each year for retirement savings.

NEW YORK (CNNMoney)

You're on the right track. Setting a budget and figuring out short- and long-term savings goals is one of the first things on most financial planning checklists.

So how do you figure out which goal to tackle first? Even at a young age, retirement savings should be at the top of your list, said Anna Behnam, an Ameriprise financial adviser based in Rockville, Md.

"Once retirement comes there is no going back," she said. "So retirement is one of those non-optional (goals)."

Unless you have significant high-interest debt to tackle, strive to put away at least 10% of your annual income each year. Beyond taking advantage of workplace savings plans, Behnam recommends that young savers consider contributing some after-tax income to a Roth IRA, which allows investment earnings to grow tax-free.

Money 101: Setting priorities

Next: figure out monthly student loan payments. While you may be eager to pay student loans down as quickly as possible, it's best to figure out a payment schedule that works with your budget and other savings goals, according to Behnam.

"If you're going to have any debt, student loans aren't bad," she said. Despite a recent hike in student loan rates, Stafford borrowers are still only paying a 6.8% rate, roughly half of the average rate of 13% you'd pay on a credit card.

Now, you can move on to savings goals. But before you even think about saving for a house, you should start building up a sizable cash reserve for emergencies. From dealing with a lost job to an unexpected hospital bill, having extra cash on hand is a key way to stay out of debt.

Employees with steady paychecks should sock away at least three months of expenses, Behnam said. Those who are self-employed should save six months' worth.

And finally, once you feel comfortable with your cash savings, you can start saving for a down payment on a house.

Related: Home prices: Your local forecast

Research home prices in your area so you can create a realistic savings goal. You want to be able to afford a 20% down payment and pay for closing costs out of pocket, she said.

If you start getting discouraged, remember to keep your eye on the long-term prize.

"The problem with long-term savings is you don't get the instant gratification," Behnam said. "You have to be able to take the emotion out of it and figure out what is most important to you."