Create Budget
(Fundamental to a solid financial footing is knowing where your money is going, budgeting helps you see your sources of income less your expenses.)Pay Rent/Mortgage
(Including renters or homeowners insurance, if required)Pay Essential Items
(Power, water, heat, toiletries, etc.)Pay Income Earning Expenses
(Necessary transportation expenses, possibly Internet/phone, anything required to continue earning income)Pay Health Care
(Health insurance and health care expenses)Make Minimum Payments On All Debts & Loans
(Student loans, credit cards, etc.)Build Small Emergency Fund
(Either $1,000 or one months' worth of expenses, whichever is greater; use a savings or checking account.)Pay Any Non-Essential Bills in Full
(Cable, Internet, phone, etc.)Does your employer offer a retirement account with an employer match?
Yes: Contribute the amount needed to get the full employer match, but nothing above that amount.
No: Move on the next step and consider asking your employer to match contributions.
Do you have any high interest debt?
(i.e., debt with an interest rate of 10% or higher)Yes: Evaluate the merits of the "Avalanche" and "Snowball" methods and their advantages in your personal finance financial/pyschological situation and apply accordingly to pay off these debts.
No: Move on to the next step.
Increase Emergency Fund 3-6 Months Living Expenses
(Use a savings or checking account)Do you have any moderate interest debt?
(i.e., remaining debt over 4-5% interest rate, excluding mortgage)Yes: Evaluate the merits of the "Avalanche" and "Snowball" methods and their advantages in your personal financial/psychological situation and apply accordingly to pay off these debts.
No: Move on to the next step.
Evaluate the merits of a Roth vs Traditional IRA in the context of your personal financial situation and max the yearly contributions accordingly.
Are you expecting any large, required purchases or personal investments in the near future?
(College, professional certifications, a car so you can get to work, etc.)Yes: Save the amount needed for these expenses in a savings or checking account.
No: Move on to the next step.
Are you currently saving at least 15% of your pre-tax income for retirement?
(Total contributions to all retirement accounts; note that you may need to save more if you are behind on retirement savings.)Yes: Move on to HSA Investing
(HSA Investing)No: Does your employer offer a 401(k), 403(b), or similar retirement plan into which you could save more money?
Yes: Increase contributions until you have reached 15% pre-tax income being saved for retirement.
No: If self-employed, contribute to an Individual 401(k), SEP-IRA, or SIMPLE IRA to reach 15% pre-tax income saved; if not self employed, contribute to a taxable account to reach this goal.
Do you have a qualified high-deductible health plan and are thus eligible for an investable HSA?
Yes: Max yearly HSA contributions
No: Do you have children and wish to help pay for some or all of their college expenses?
Yes: Evaluate available savings/investment options, such as a 529 plan, and contribute accordingly.
No: At this point, you have some options on how to proceed, and it is completely up to you and your personal goals and desires.
Would you like to retire early?
Max out 401(k), 403(b), or other employer sponsored account, consider the "mega backdoor Roth IRA", then use a taxable account.Do you have more immediate goals?
Use savings for goals sooner than 3-5 years, a conservative mix of stocks and bonds for goals more than 3-5 years away.(Common examples include down payments for homes, saving for vehicles, paying down a mortgage, and vacation funds.)