Which Dollar Goes Where?

The story: Marcus splits it six ways

Marcus spreads a small pile of money six ways on a kitchen table, then Ana lays out a map that puts the steps in order.

1. Narrator: Marcus, an electrician’s apprentice, just got a raise and has $300 a month to put somewhere.
2. Marcus: Savings, my card, retirement, a trip… I want to do it all, so I split it six ways.
3. Narrator: Six small piles means every goal moves slowly, while the card keeps charging an example 25% APR.
4. Ana: Many people use an order instead. Each step has a reason.
5. Narrator: First, a starter emergency fund. Then enough to get the full match, which is part of your pay. Then high-rate debt.
6. Narrator: Then a full emergency fund, then an HSA or IRA, then more for retirement and other goals.
7. Marcus: My job has no match, so that step drops out for now. The card is next.
8. Narrator: A guide, not a rule: starter fund, match, high-rate debt, then build.

What you’ll learn

1. A common order

   A common order for the next dollar: a starter emergency fund, enough to get the full employer match, high-interest debt, a full emergency fund, an HSA or IRA, more for retirement, then other goals. It’s a guide, not a rule.

2. Why each step sits where it does

   A small emergency fund keeps surprises off a credit card. The match is an instant return. High-rate debt costs more than most investments earn. A full emergency fund protects the plan. Tax-advantaged accounts come before taxable ones.

3. Your situation can change it

   No match at work? That step drops out. Low-rate debt, like many student loans, is often paid on schedule while saving goes on. Income that swings from month to month may call for a bigger emergency fund first.

4. Savings rate and a yearly check

   Your savings rate is the share of your pay that you save. Raising it a little at a time keeps the plan moving. Checking the order once a year keeps it current as life changes.

   Example: $300 saved from $3,000 of monthly take-home pay is a 10% savings rate.

Key words

priority order

a ranked list of where the next dollar goes

savings rate

the share of your pay that you save

Common questions

How big is a starter emergency fund?

Many people start with enough to cover one surprise, like a car repair, then build to a few months of costs later. The emergency fund lesson covers sizing.

What counts as high-interest debt?

There’s no official line. Many people put credit cards and other debt that charges more than investments usually earn in this group.

Remember this

Starter fund, match, high-rate debt, then build.

Try it: Write your next 3 steps

1. Find where you are in the common order.
2. Write down your next 3 steps, in order.
3. If step 1 is an emergency fund, size it with the Emergency Fund Calculator.

Write your next 3 steps in order, plus the Emergency Fund Calculator for step 1.