Where Should My Next Dollar Go?

Many clients share the same concern: figuring out how to allocate their hard-earned dollars.

Clients often experience stress and uncertainty when deciding where to allocate their money. Without proper guidance, there is a risk of inefficiently using cash, overspending, or leaving funds unused in bank accounts. 

To facilitate a more meaningful conversation between you and your financial advisor, use the information and comprehensive flowchart below. It's designed to address your unique goals and preferences and guide you in the process of developing your personal “financial order of operations.”

Key Considerations

Some factors that need to be considered when determining where your next dollar should go are:

1. Establishing Financial Security

   • Ensure you have an adequate emergency fund (3-6 months of expenses saved), are budgeting and managing your cash flow (spending less than you make), and possess appropriate insurance coverage.
   • Focus on paying off high-interest debts first. The longer you hold on to high-interest debt, the more expensive it becomes. Whenever possible, try to pay more than the minimum on your debt each month to reduce what you owe over time.

2. Leveraging Employer Benefits

   • Explore any “free money” opportunities available through your employer’s benefits.
   • Ensure you are taking full advantage of these perks to enhance your financial situation. For instance, make sure you’re contributing enough to your retirement plan to get the full 401(k) match from your employer.
3. Knowing What Your Goals Are

• • Identify short-term (1-2 years), medium-term (3-5 years), and long-term (5+ years) goals.
  • Include logistical goals (buying a home), aspirational goals (traveling), and retirement-related goals.
  • Define your desired retirement age and type (semi-retirement, full retirement, recreational retirement). It's OK if your vision of retirement changes over time.
    
    

Where Should My Next Dollar Go Flowchart

Next Step: Let's Discuss Your Financial Path

Here are some questions we commonly address for other clients:

• Financial Security: How secure is your financial well-being? Do you have an adequate emergency fund, financial solvency, and the necessary insurance coverage?
• Employer Benefits: Are you fully utilizing the benefits offered by your employer? Have you taken advantage of any available “free money” opportunities?
• Debt Management: Are you prioritizing high-interest debts to minimize long-term costs?
• Tax-Advantaged Accounts: Are you making the most of tax-advantaged accounts to maximize your savings?