Straightening Out Your Finances

Whether you have unpaid student loans or just looking to set aside some rainy day funds, financial priorities differ from one person to another. When it comes to financial success (whatever that means to you), there is no right or wrong way to get where you want to be. There is however, a common path that many people can agree will help along the way.


Having enough money to cover your essential expenses is the first step toward straightening out your finances. Making sure you have enough for your non-negotiable’s like… rent, food, minimum balances on unpaid debts, etc. All of these need to be your first priority before you should start working on other goals.

Emergency Fund

Once you have the basics taken care of you should start working toward your Emergency Funds goal. This fund will vary for every person but a good rule of thumb is at least $1,000. If you have the means to save more than ideally you should work toward saving enough to take care of a few months worth of those basic expenses above.

Invest for Retirement

Once you have yourself an Emergency fund you should start working toward a retirement fund. If your employer offers a 401(k) ideally you would put away at least what your employer will match. Other retirement options include IRAs, Roth IRA, or for the self-employed a SEP IRA. If you can invest 5-10% of your income this is a very good place to be.

Take Care of High Interest Debt

You should then focus on paying off your highest interest debt. Although you should already be paying the minimum on these debts, using any extra income to pay off your highest interest debt is a smart move. That debt is costing you even more money every day it remains unpaid, of course.


Rinse and Repeat

Once you take care of your debt, it’s a good idea to start putting more money toward your emergency funds. Try to save up 4 to 6 months worth of expenses, and then once you have that you can start investing in other places. Retirement, your children’s college tuition, or anything else for that matter, the choice is yours!


This is just an outline to start getting your money in order, or recover from a setback. It doesn’t take into account goals like saving for a house, or for kids, but it’s a good place to start if you’re unsure how to prioritize your many financial to-dos.