Do THIS When You Get Paid! Financial Advisor Payday Routine

I’ve been a financial advisor for almost—it’s hard to believe to say this—30 years. And so many of the questions we get boil down to, I have this money now. What do I do with it? That’s what we’re going to be looking at today. We’re going to go over the five crucial steps that you need to take as soon as you get paid in order to build wealth and achieve financial independence.

With that, let’s jump right in.

First and foremost, you have to know where you’re at. Before you can make progress on your financial journey, you need to establish your starting point. It’s impossible to reach your destination without knowing where you’re starting from. Unfortunately, many people fall victim to what is called avoidance bias, one of the most dangerous traps early on in your financial life.

Avoidance bias is a psychological tendency where people steer away from situations, information, or even decisions that might trigger discomfort, stress, or fear of loss. In personal finance, this often shows up when individuals avoid checking their bank statements, credit card balances, or investment accounts because they don’t want to face the reality of their financial situation.

There’s a real cost to financial ignorance. A 2024 report from the National Financial Educators Council found that Americans lose an average of $1,015 annually due to a lack of financial knowledge. That’s money that could be growing in your investment accounts. The statistics paint a concerning picture: only about 45% of Americans report using any financial tool to track their money, while 77% report feeling anxious about their finances. These stats aren’t unrelated. By choosing to ignore your finances, you’re not avoiding money problems—you’re avoiding their solutions.

Knowing where you stand financially provides a tremendous boost to your overall financial awareness and helps make the roadmap ahead much clearer. Start by listing exactly what’s coming in and going out each month in a clear format. This gives you the financial clarity needed to make informed decisions about your money. Don’t overcomplicate this process—a simple spreadsheet or budgeting app works just fine at this stage. The key is consistency. Review your financial position monthly to track progress and make adjustments as needed. Once you have this foundation of knowledge, you can confidently move on to putting your money to work more effectively. Financial clarity is the first step toward financial freedom.

After you have your bearings, you can actually put this knowledge to use with the money you have coming in. Knowing your monthly inflow and outflow is critical for knowing two big things: the size of your emergency fund and how much you can save.

If you’re starting from zero, the absolute first place that your money should be going after you get paid is to a high-yield savings account. Set up an automatic contribution of whatever margin you have to start building up that buffer. If you find additional areas to cut and free up extra cash, all the better. This is your starter emergency fund—the buffer between you and life’s surprises and desperate decisions. Whether it’s a medical bill or a car repair, setting aside cash in a high-yield savings account can ease the financial anxiety that comes with the unpredictable nature of life.

Once that cash buffer is at a reasonable level—when starting out, we suggest saving an amount equal to your highest deductible—you can start looking at some of the other exciting stuff that happens in your financial life. What you do next may look different depending on your unique circumstances, but broadly speaking, think about this as what’s in your best interest.

If you have an employer match through a 401(k) or an employer-sponsored retirement plan, focus on that first. Contribute enough to get the full match. After that, move on to high-interest debt—anything like credit cards, most cars, or even some student loans depending on the interest rate.

The reason we say “your best interest” is that you’re focusing your attention and money on the highest return available. If you have an employer match, that’s a potential 50% to 100% return on your money, depending on how the plan is structured. That even beats a credit card charging 20–30% APR. But once you’re focusing on high-interest debt, you have to get out from under that before most investing opportunities make financial sense. Ignoring a 30% credit card to go and get an 8% investment return is effectively choosing to lose 22% a year on your money.

After you’re out from under any high-interest debt, you can put your dollars back toward that emergency fund until you build it up to 3 to 6 months of expenses. If you’re overwhelmed getting all these steps thrown at you, don’t worry. The good news is that once you set the right system in place, you don’t have to spend much time focusing on these steps.

The main throughline through every single one of these steps is to automate the process. If there’s one thing you can take away from this episode, it’s to automate as much as you possibly can. Set up automatic transfers to your high-yield savings account until your starter emergency fund is fully funded. Automate your salary deferrals to capture that full employer match. Put your high-interest debt payments on autopilot and direct any extra funds toward paying down those debts even faster.

After this, automate those contributions to tax-advantaged accounts like your Roth IRA or Health Savings Account (HSA) directly from your bank account or payroll. For 2025, maxing out a Roth IRA as a single person means setting aside $134.61 weekly or $269.23 bi-weekly. Health Savings Account contributions would be $82.69 weekly or $165.38 bi-weekly. This automation puts your money to work building your financial future without requiring constant attention.

Once you’ve maximized these tax-advantaged opportunities, consider additional contributions to employer plans like your 401(k) or begin funding an individual brokerage account. Brokerage accounts are particularly valuable for those saving beyond retirement limits since they offer flexibility without the contribution caps or withdrawal restrictions of retirement accounts. They’re essential tools for high earners, super savers, and FIRE (Financial Independence, Retire Early) enthusiasts.

You might be wondering when you’re supposed to stop inching your savings rate further up. We suggest folks aim to save 25% of their gross income. That number may sound scary, but with your employer match, scaling up your income, and avoiding lifestyle inflation, it’s completely possible. If you start in your 20s and 30s, maintaining that 25% savings rate removes a huge burden from your future self. The power of compounding growth means those early dollars have decades to multiply.

For those in their 40s and beyond who haven’t been able to save as aggressively earlier, this 25% target becomes less of a recommendation and more of a necessity to catch up and secure your retirement timeline. The earlier you establish these good habits, the less you’ll need to save later. That’s another reason why automating your finances immediately after each paycheck is so powerful.

You might be wondering about low-interest debt like 4% student loans or mortgages at 2–4%. We don’t recommend prioritizing these payments for the same mathematical reason we emphasize tackling high-interest debt earlier. When you’re paying 4% interest on a loan but could potentially earn 7–10% by investing in a diversified portfolio over the long term, the math favors investing. This interest rate differential creates what we call an arbitrage opportunity—the chance to earn more through investments than what you’re paying in interest.

Additionally, some low-interest debts like mortgages come with tax advantages that effectively lower their true cost even further. By making minimum payments on these debts and directing extra funds toward investments, you potentially increase your net worth faster than if you prioritize debt elimination.

This strategy requires discipline and a long-term perspective, but the compounding growth from investments often outpaces the interest savings from paying off low-interest debt ahead of schedule. Of course, there’s also a psychological benefit to being debt-free that some people value more than the mathematical advantage—and that’s perfectly valid too. Financial decisions aren’t always purely about the numbers.

But here’s the good deal: if you want to be a debt crusader, you can do that—as long as you’re saving and investing the 25% first. The key is to tackle these steps one at a time and in order. This methodical approach will keep you motivated as you make visible progress through your financial journey. Once those habits are automated, they become second nature. You’ll be amazed at how quickly your financial life improves when you don’t have to think about every single money decision.

We talk about how to do all this on the channel all the time. And if you want all these steps in one place for a simple step-by-step guide on what to do with your next dollar, check out the Financial Order of Operations available for free at moneyguy.com/resources. Go get it if you haven’t already—it’s completely free.

And as always, keep making those decisions today that will help you build your great big beautiful tomorrow.