It's a big - and sometimes bad - world out there, particularly for young consumers just starting out. Establishing your financial identity is a critical stepin getting on the road to success.

"How we manage money is a part of our financial identity," says Meredith Fernstrom, senior vice president for public responsibility at American Express. And it's important to establish that identity early and correctly.Here are some of the basics to consider in getting started:

CHECKING/SAVINGS

The first step in starting out financially is to open an account at a financial institution. The best combination of checking and savings accounts will depend on your income, on interest rates and on other economic conditions. (And, as with all other financial decisions, it is something you should evaluate periodically to see if your needs have changed.)

Selecting a financial institution: Consider customer service. Consider such things as the institution's reputation for providing prompt personal service and for handling problems (ask friends, family or co-workers about their experiences). Is it conveniently located? Can you make deposits and withdrawals after hours?

Look at terms and conditions. Are canceled checks returned with the monthly statement? Can you arrange for automatic deposit of your paycheck? For immediate credit on deposits? For a loan or a line of credit? What are the fees for these services?

Deciding on a checking account: There are basically two types of checking accounts - those that earn interest and those that do not. Before opening a checking account of any kind, ask: Must I keep a minimum monthly balance to get free checking? Or, how many checks are free, and what is the fee for additional checks? What is the charge for a "bounced" check? On interest-bearing accounts, what is the annual percentage yield? How is interest computed?

Deciding on a savings account: Many financial institutions offer a growing variety of savings instruments. Terms, conditions and rates of return vary.

A traditional passbook savings account can be opened with a small deposit and may be the only option for people just starting out. Depending on your economic conditions, other alternatives - such as certificates of deposit, money market deposit accounts or U.S. savings bonds - are available. Ask: What minimum balance, if any, is required to avoid fees or penalties? Is the annual yield at a fixed rate or does it fluctuate? How often is interest compounded? Can you withdraw funds or transfer them to any other accounts without penalties? Is your deposit insured by a federal government agency?

ESTABLISHING CREDIT

A second step is to start working on a good credit rating. Young people must establish a history of creditworthiness before a financial institution will lend them money or extend credit. Credit reporting agencies keep credit histories and sell them to potential creditors.

Ways to begin to build a credit history include getting a job and establishing a steady work record, paying bills promptly, opening a savings and checking account (and not "bouncing" checks). You can also apply for credit from one or two institutions. For example, you can obtain a small loan from a bank or credit union (have a friend or relative co-sign, if necessary); or apply for a credit or charge card where it is relatively easy to qualify, such as at a local department store or bank.

Check credit bureau records periodically to be sure your credit accounts are reported accurately and completely. (There is usually a small fee.)

You should also be careful not to apply for credit from too many places at once. A creditor may turn you down if the total amount of credit you have is more than what creditors allow someone in your circumstances.

Be sure to count the costs of using credit. The total cost of credit is the interest you pay plus any fees. The cost of credit varies widely, so it is important to comparison shop. Ask: What is the annual percentage rate (APR)? Is there a grace period before interest is charged? Do you understand all terms and conditions before you sign a loan agreement? If you plan to pay your credit bill in full each month, is there an annual fee or other charges? Does the credit card offer any "extras" or special benefits - and do they cost? Are they benefits you need?

EMPLOYEE BENEFITS

A third area of concern in establishing your financial identity is to be aware of and take advantage of any employee benefits that go with your job. Most medium-sized to large firms offer a variety of benefits, including health and life insurance, retirement benefits, disability protection, paid holidays, vacations,etc.

Before you take a job, you may wish to review the employee benefits just as you would evaluate your auto insurance each time you buy a new car. Ask: What kind of insurance do I need at present? Do the employer insurance benefits meet these needs, or do I need to buy additional coverage? Do the workplace health benefits provide enough coverage for hospitalization? For doctor's visits and diagnostic tests? For major medical expenses? For dental care? If not, is it worth buying supplemental insurance to fill in the gaps?

PLANNING AHEAD

At every step of the way, planning is a vital part of the process. To the newly independent, with modest income and assets, financial planning may seem like a grandiose name for some simple decisions. But financial planning it is - and it is the key to positioning yourself to be able to reach goals and weather crises in the years ahead. You have to know what those goals are and what the best way is to reach them.

For more information, you can get a copy of "Getting Started," a brochure prepared by the American Express Consumer Affairs Office, in cooperation with the U.S. Consumer Information Center, the USDA, AARP, the Federal Trade Commission and IDS Financial Services. Write to the Office of Public Responsibility, American Express Co., World Financial Center, 200 Vesy St. New York, NY 10285-4700.

Poor excuses for not saving money

1. Expenses take up all of my paycheck.There are certain fixed expenses each month that you have to pay - rent, utilities, food. You should look at savings as a fixed expense, too. Write a check to savings first thing. Maybe you should look into a payroll saving plan, so it takes the money out before it comes to you. If you truly can't squeeze out any for savings, evaluate the rest of your budget. You are probably spending more than you can afford in other areas.

2. I can't save enough to make any difference.Any financial adviser you talk to will tell you that it's not the quantity as much as the consistency that is important. Time is on your side, and so is compound interest. Even $25 or $50 a month can make a big difference over the long haul. $5 a week will add up to $500in less than two years. If you save $25 a month at 5 1/4 percent interest, at the end of five years, you'll have $1,711.

3. I don't know how or where to invest my savings.You don't have to worry about a lot of options at first. Start accumulating savings in a passbook savings account. Once you get more than $500 saved, then you can look into CDs and money market funds. A good place to start looking is at the place you work - payroll savings plans, company thrift plans, credit unions and so forth.

4. I don't want to take any risk.Risk-taking should not play a major role in early savings. Most of the places to start accumulating savings are considered safe investments. (Make sure that savings and loans and banks are federally insured.) When you accumulate enough money to venture further into the market, there are still conservative investments. A good investment counselor or financial planner can advise you. It's never a good idea to risk more than you can afford to lose.

8 common money management mistakes

1. No spending plan.Are you are constantly wondering where the money went? This happens because of day-to-day spending without any sort of plan to take care of needs and wants. What you need to do is set priorities. Know your regular expenses and what your goals are in relation to short- and long-range aims.

2. No cash reserve.Financial experts recommend you have a cash reserve of at least 50 percent of your annual income. To acquire this means developing good saving habits and self-control in spending.

3. Too much use of credit.Credit can be a useful tool - if you don't abuse it. The biggest problem is overextending yourself and becoming committed to largerpayments than you can meet. Shop carefully for credit; terms and conditions vary.

4. Poor use of windfalls.You receive a tax refund, a bonus, a raise, a gift. Don't just spend it on luxuries you wouldn't ordinarily consider. Instead, add pay raises to savings before you get in the habit of spending the extra money. Use refunds and bonuses for needed large purchases (that way you can avoid interest charges.)

5. Underestimating the cost of ownership.The original cost is not the only cost of ownership. This is especially true of automobiles. Many of the costs involved - maintenance, repair, insurance, etc. - get overlooked until you run into them.

6. Impulse buying.Frittering away small amounts here and there can add up to a surprisingly big amount. If you doubt it, write down every cent you spend for a week and take a good hard look at your spending "leaks."

7. No provision for large expenses.Everyone has large, predictable expenses that come around once a year - insurance, taxes, etc. Take those big items and divide the total by 12. This 1/12th is the amount you should reserve each month against the time the bills come due.

8. Can't wait attitude.This money management mistake hits young people the hardest. The impatient ones want to start off at a level that has taken their parents 25 years to reach. But this level takes time and discipline. It is never reached by overusing credit. What is needed is a "save now and buy later" approach.

Are you a good risk?

Here are key things credit managers and loan officers (or actually their computers, as most loan applications are judged on a point system) look for in granting credit:

- Stability.Years on the job, time at one residence, home ownership and a home phone are all pluses.

- Income.Some look at total income, some only at disposable income. Income may show up indirectly through such things as home ownership.

- Financial history.Credit references (credit cards and other kinds of credit you already have), credit history (how well you have paid debts in the past) and bank and checking accounts are crucial factors.

- Age.In general, the older the applicant, the better the credit rating. However, credit cannot be denied solely on the basis of age.

Other factors that may be considered include occupation, age of your automobile and number of dependents. Under the Equal Credit Opportunity Act, they may not consider race, sex, religion or marital status.