While it is difficult to dictate an exact order that will be appropriate for everyone, there are some general guidelines that most agree on.

  1. Obtain any available employer match. Missing out on this is leaving part of your salary on the table.
  2. Eliminate high-interest rate (8%+) debt. This risk-free “investment” provides a guaranteed return that you will need to take significant risk to beat.
  3. Fund a Health Savings Account (HSA) if a High Deductible Health Plan is right for you.
  4. Fund all available retirement accounts. This includes 401(k)s, 403(b)s, Individual 401(k)s, profit-sharing plans, SEP-IRAs, SIMPLE IRAs, Backdoor Roth IRAs etc. Remember you may be able to have multiple 401(k)s. Fund the tax-free (Roth) ones first unless you are in your peak earnings years and don't expect to be able to max out both tax-deferred and tax-free accounts for the year.
  5. Consider 457b and other deferred compensation plans, if available.
  6. Consider a defined benefit/cash balance plan.
  7. Pay off moderate interest rate debt (4-8%).
  8. Invest in a taxable account in high expected return investments.
  9. Pay off low interest rate debt (<4%).
  10. Invest in a taxable account in low expected return investments.