For many young adults in Silicon Valley, Michaela Nielsen's New Year's resolution may sound familiar: ``I've got to get these finances under control,'' she said. ``My husband and I have $30,000 in debt, we make $40,000 a year, and believe it or not, we'd like to buy a house here someday.''

But Nielsen, a 26-year-old lab technician from Los Gatos, has run up against the three biggest obstacles to financial success that people her age are facing: a sluggish local economy, a costly housing market and out-of-control spending habits.

``We spend pretty much everything we get,'' Nielsen said. ``Part of it is that we just don't make enough, but I feel like I almost can't save -- and that worries me.''

Financial advisers are unanimous on this point: People in their 20s are in the best position to save, because they have so many years ahead of them for interest to compound. It's possible even with debt, advisers say, if young people make the right choices.

Nielson is not the only one in trouble. Bankruptcy filings among 18- to 24-year-olds nationwide doubled in the 1990s, according to the American Bankruptcy Institute. More and more young people are graduating from college with significant student loans -- almost $19,000 on average, according to a 2002 study by student-loan provider Nellie Mae. The average student is also graduating with $3,300 in credit-card debt.

``This is one of the major crises our culture is facing,'' said Robert Manning, a professor at the Rochester Institute of Technology and the author of ``Credit Card Nation.''

And many don't even realize that they're digging themselves a hole, said Susan Galvin, executive director of the Kinder Institute, specializing in life planning in Pleasant Hill.

``Credit cards weren't easily available 25 years ago,'' she said. ``Debt was shunned as unacceptable. It's very easy to get in over your head these days.''

Everyone is vulnerable; there were 1.5 million personal bankruptcies in the United States in 2002, and 2003 is expected to be worse. Clearly, young adults are not the only ones in tough financial straits, but they might have the most to lose.

Galvin noted that investing $2,000 a year from ages 22 to 29 at a 10 percent interest rate produces the same amount of money as a $2,000-a-year investment from ages 29 to 66.

Even $2,000 a year can sound like a lot to young people like Nielsen. But experts say it is possible to save -- if you get control of your spending.

``In practical reality, people in their 20s tend to spend their money on indulging their desires,'' Galvin said. ``And this is where the conflict comes in, because saving could have such a huge impact.''

To save money, Galvin said, it's necessary to shut out the noise of advertisements and peer pressure and ask: What do I really want from life?

Most people would rather have intangibles -- love, safety, freedom -- than possessions. With some thought, Galvin said, it becomes easy to see which purchases are necessary and which are negotiable.

Here are some experts' top strategies to save for the future.

Something every week

Mary Kay Wright, a planner with American Express Financial Advisors in Walnut Creek, encourages her clients to save something every week, even if they have a heavy debt load.

Even $5 a week will help form a habit of saving, she said, and that money can start a cash reserve for emergencies.

``There's a tremendous sense of relief for people when they get out of debt and have a cash reserve already in place,'' Wright said. ``They've learned how to save regularly, which is a skill that will help them avoid debt again.''

For people who have no high-interest debt, most financial experts advise saving 10 percent of every paycheck, preferably through a hands-off strategy such as direct deposit.

``You're giving yourself the message that your future is worth the first payment you make every month,'' Wright said.

Start saving now

Financial planners recommend starting to save for retirement as early as possible. Economists have been sounding the death knell for the Social Security system for years. ``Young adults today will probably be entirely responsible for their own retirement,'' Manning said.

Many employers offer 401(k) investment plans -- widely viewed as the best vehicle for retirement savings. They invest pre-tax contributions in mutual funds and stocks.

Some companies match 401(k) contributions with as much as 50 cents for every dollar, which is an automatic 50 percent return. It would be tough to find a better investment.

The maximum 401(k) investment for 2004 is $13,000.

Consider the tax benefits as well. If your employer has a 401(k) program, contributions are taken out of your paycheck before taxes. So the remaining base pay is lower, meaning lower taxes, too. (You will have to pay taxes when you start making withdrawals.)

For those without access to a 401(k) program matched by their employer, a Roth IRA is the best option. The government allows contributions of up to $3,000 a year -- growing to $5,000 by 2008 -- that can be invested in stocks and mutual funds. The contributions are taxable, but withdrawals will be tax-free.

Money in these retirement accounts can be used to pay for higher education or a first home, making them one of the best savings vehicles for young people. Financial advisers suggest considering the consequences of such a move carefully, however. With a Roth IRA, the money can't be reinvested, meaning less for retirement. But with a 401(k), the money must be repaid.

Emergency fund

If you don't have anything saved for emergencies, it's easy to pull out a credit card. Instead, experts advise putting at least three months' worth of basic expenses in a savings account. When you raid that money to buy new tires, pay yourself back.

However you decide to save, experts say the most important thing is to do something. Nielsen, for one, has decided on drastic action.

Most of the debt that she and her husband, also a lab technician, owe is in student loans. They have applied to graduate school in the hope that advanced degrees will allow them to make more money.

While they wait to hear from admissions boards, they're planning to live in India. Her husband's family owns a house there, and the cost of living is much lower.

``I'm confident that someday we're going to get out of this,'' Nielsen said. ``But for now, we had better save as much money as we can.''

This story ran on Mercury News on Jan. 04, 2004 .