The Financial Order of Operations: A Step-by-Step Guide
Confusion kills wealth. Should you pay off debt or invest? Save for a house or retirement? Here is the proven, research-backed order of operations to maximize your dollars.
Based on consensus from financial experts like The Money Guy Show (2024) and Baskin Financial Planning, this roadmap ensures you build a secure foundation before taking on risk.
The Match
Secure the employer match on your 401(k). This is a guaranteed 100% return on investment. Do not skip this free money.
The Shield (Starter Emergency Fund)
Save $1,000 to cover your highest insurance deductible. This prevents minor bad luck from becoming major debt.
The Attack (High-Interest Debt)
Aggressively pay off any debt with an interest rate above 8% (credit cards, personal loans). This is a guaranteed 8%+ return.
The Foundation (Full Emergency Fund)
Build a full 3-6 month emergency fund. This gives you the freedom to make life decisions without fear.
The Future (Roth IRA / HSA)
Maximize tax-advantaged accounts like Roth IRAs and HSAs. Tax-free growth is the most powerful wealth builder in the tax code.
The Cleanup (Low-Interest Debt)
Pay off remaining low-interest debt (car loans, student loans below 5%). Once you're debt-free, every dollar you earn is yours to keep.
The Legacy (Wealth Building)
Max out retirement accounts, invest in taxable brokerage accounts, and build generational wealth. This is where financial freedom becomes reality.