Just Got Paid? Here’s Where Your Money Should Go ASAP

7 steps to making your paycheck work for you

Prior to the pandemic, a 2019 Charles Schwab survey found that 59% of American adults were living paycheck to paycheck. Further, 44% have credit card debt and only 38% have an emergency fund. And living paycheck to paycheck wasn’t necessarily found to just be a low-income problem. A more recent study conducted by advisory firm Willis Towers Watson found that 18% of six-figure earners were also living paycheck to paycheck.

While the skyrocketing cost of housing and education, the prevalence of high-interest consumer debt, and now the global pandemic have made getting ahead financially much more difficult, understanding how to allocate your paycheck before it’s in your hands to spend is the first step to getting out of debt, building wealth, and obtaining long-term financial freedom. So next time you get paid, here are the seven places your money should go — besides straight into checking as a lump sum.

Step 1: Your Retirement Fund

Your retirement contribution will generally come out of your paycheck automatically via an employer plan, but if you’re self-employed, I recommend automating a biweekly transfer from your take-home pay straight into a Roth IRA. I like to contribute up to the employer match, which will generally amount to…