Where does your money need to go after you get paid? This video is about the 6 Places where your money should go - to save money and invest!

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Today I wanted to walk you through step by step exactly where I think your money should go whenever you get paid. I think that a lot of people get confused as to how they should be allocating their money when they get paid - and honestly if you just follow along with the steps outlined in this video, you could find yourself in a way better financial situation in the future.

Step 1 is contributing to a retirement account, but before I even talk about that, we need to first address that most people don't even get to Step 1 because most people just have their pay, when they get paid - going into their checking account. And then they spend their money - whether that be needs, wants, investments, debt payoff, all out of one account. This is not the best approach because it's not a proactive approach, it's more of a reactive strategy and that's one we want to avoid for financial independence. And this is exactly what I used to do as well, so there's no shame in being here, but lets talk about how we can get better.

Step 1.
We want to be sure that a percentage of our paycheck before it even hits our account is being set aside for retirement.

Step 2.
The money finally hits your Checking account. Then it can go a few places...

Step 3.
I guarantee you haven't heard of this, it's a fund I've called "The Overhead Fund".
- Essentially its a fund for all of your NECESSITIES in life - rent, utilities, groceries, insurance, car payments, etc.
- THIS IS NOT an EMERGENCY fund, I'll talk about this next.
- Rather, this is a fund that you only use to operate your necessities, and it's also a fund that I think you should try to save around 3-6 months of NECESSITY expenses in.
- Ideally you know your monthly recurring expenses down to a number, and you save a portion of your paycheck toward this fund
- I like using an Overhead Fund for this as a separate account, and I would suggest allocating most of your paycheck into this fund and your emergency fund until they're established.

Step 4.
Your Emergency Fund.
Ideally this is an account that you DO NOT touch unless, for EMERGENCIES. Most people suggest 3 months of living expenses for an emergency fund.

I would suggest 6 months of living expenses for your emergency fund, but that's just because I like to be on the safer side.

Step 5.
Paying Off Debt
If you have any high interest rate debt, you want to start putting a dent in that as well before moving on to Step 6. High interest rate debt would be anything over 10% in my opinion, but you could even make an argument that even 5-6% is high interest rate debt since its hard to easily beat that interest rate using investments.

Step 6.
Investments! This is where it gets fun. The money that is going into this investment account, it can really flow to a lot of places.

Within this account you are hopefully breaking down any money that you may have into different investments for a well-diversified investment portfolio.

These type of investments include:
- Portioning off some cash for a real estate fund
- a Fun fund for vacations, dream cars,
- Investing in a Roth IRA or Traditional IRA for more retirement funding
- Shorter term investments like stocks, bonds, dividend portfolios
- Cryptocurrency
- Precious Metals, Collectibles, etc.

▶️ My name is Humphrey Yang, I've built multiple businesses and am passionate about Personal Finance. If you're trying to build a solid foundation of financial literacy, learn to invest, or become financially free - then I'm here for you! This channel cover topics like getting out of debt, managing money, building credit, multiple income sources, passive income, etc.

📧 Contact: If you have a question feel free to leave me a comment on my videos or follow me on IG and send me a DM! If you have a business related inquiry, please then send me an email at [email protected]

Disclaimer: I am not a financial advisor, any investment commentary are my opinions only. Some of the products and services that appear on this channel are from companies that I have an affiliate relationship with, such as Robinhood, for which I recieve a small percentage made via those links, but it doesn’t cost you anything extra!