People often ask: “What should I do first?”

Here’s the order:

1. Invest up to the match in your employer’s 401(k) plan (Roth if available). The employer match is “free money.” Don’t leave it on the table.
2. Make maximum contributions to your Health Savings Account (HSA). An HSA is the best deal going (see my blog post dated November 10, 2024.
3. Don’t forget the additional “catch up” contributions if you are over 55.
4. Make maximum contributions to your Roth IRA. If you are over income limits to make Roth contributions, do a “backdoor Roth”.
5. Optional: Invest in a 529 college savings plan (new rules can roll over to your kid’s Roth)
6. Go back & make the maximum contribution to your employer’s plan (tax advantaged).
7. Invest additional funds in a regular brokerage account which provides more investment options than a 401(k).

No employer plan or no match? Start with Step 2. Above.

Self-employed? Get a Solo 401(k) or Self-Employed Pension (SEP).

No HSA? Go to Step 3.

You can do some steps at the same time (for example: you can schedule HSA & employer plan contributions via payroll deductions over the calendar year)

Simplify your life by setting up payroll deductions, automatic bank transfers, etc. Put it on autopilot!