Not Sure How to Manage Your Money? Follow This Simple Flowchart

A woman looks at the camera. She's leaning against a yellow wall. She also has red hair, and she's wearing a black sweater.
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Though we all know we should be saving more money, or even investing it in stocks or something, where and how to do so remains a mystery for many of us.

After necessities, should you pay down debt?

Pad your kids’ college fund?

Or save for your own retirement?

Though everyone’s situation is different — and you should carefully assess what works for you — Reddit user “Beached89” recently created an easy-to-follow flowchart that provides a great starting point.

This Flowchart is So Simple, It’s Brilliant

The flowchart presents a series of yes/no questions that explain exactly how you should prioritize your spending and investing.

Instead of going into too much detail, I’ll just share the darn thing with you.

Then, below, I’ll share related posts that have tons of advice and tips to help you with each step.

Where to invest money

Though Beached89’s flowchart is undoubtedly straightforward and helpful, putting it into action is a whole other story.

But have no fear; that’s why I’ve included tons of links below.

Click on them to learn more about your options — no matter where you stand on the path to financial freedom, I guarantee you’ll learn something!

1. Necessities

This is where everyone starts, and this is where every penny counts.

Create a budget, save money on groceries, cut back on bills and start an emergency fund.

Develop a frugal mindset, revel in free entertainment and make monthly payments on your credit cards (hopefully more than the minimum!) and student loans.

You also might want to consider getting a second job or starting a side business to bring in extra cash.

And by all means, if your employer offers a retirement account with match, then take advantage of it.

2. Baby Steps

Lookin’ good! Now focus on paying off high-interest debt, such as credit cards, quickly.

For further inspiration, read how our founder paid off $10,000 of credit card debt, or how one mom paid off $64,000 in two years.

You can also use an app like Digit to automate your savings.

3. Financially Healthy

Woohoo, you’re doing better than most people! So it’s time to start seriously saving for retirement.

Here’s what you need to know about Roth IRAs and 401(k)s — and how contributing to them could get you a tax deduction.

4. Well-Off

Made it this far? Congratulations!

Since you’re already killing it, you might want to look into paying off your mortgage, investing in real estate or retiring early.

Oh, and maybe reward yourself with some celebratory dates or a dream vacation. You’ve earned it.

Your Turn: Did you find this flowchart helpful?

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Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at, or say hi on Twitter @susan_shain.