401(k) Match or Roth IRA First?

Do this

Open a credit card account

Pay in full and on time. Build credit score, get rewards.

Question

Do you pay it in full and on time?

Do this

Limit credit card usage

Keep spending minimal until you can pay in full, on time, every month.

Essentials

Pay rent / mortgage

Including renters or homeowners insurance, if required.

Essentials

Buy food and groceries

Depending on your situation, you may prioritize utilities before this step.

Essentials

Pay essential items

Power, water, heat, toiletries.

Keep earning

Pay income-earning expenses

Transportation, internet, phone: anything required to keep earning.

Protect yourself

Pay health care

Under 26? Evaluate whether your parent’s insurance is preferable.

Question

Do you have debt?

Do this

Make minimum payments on all debts

Student loans, credit cards: every debt gets its minimum.

Do this

Build a small emergency fund

$1,000 or one month of expenses, whichever is greater. Use a HYSA.

Do this

Pay non-essential bills in full

Cable, subscriptions, recurring services.

Question

401(k) match or Roth IRA first: does your employer offer a match?

If yes, the usual order is get the match first. A Roth IRA comes later in this flowchart.

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Get the 401(k) match first

Contribute enough to capture the full employer match before you put extra into a Roth IRA. The match is free money you do not get back later. This is education only, not personal advice.

Question

Any high-interest debt?

Interest rate of 7% or higher.

Do this

Attack your high-interest debt

Evaluate “Avalanche” and “Snowball” methods. See if consolidation can reduce it.

Do this

Grow your emergency fund

Increase to 3 to 9 months of bills and everyday needs. Use a HYSA.

Question

Any moderate-interest debt?

Over 4–5% interest, excluding your mortgage.

Do this

Apply a payoff method

Avalanche or Snowball. Pick one and apply it to this debt.

Question

Do you have a qualified high-deductible health plan?

Meaning you’re eligible for an investable HSA.

Do this

Max yearly HSA contributions

The HSA is triple tax-advantaged. Fund it to the yearly limit.

Question

Does your HSA have high fees?

Do this

Roll over to a low-fee HSA

If available, move your HSA contributions to another low-fee HSA brokerage.

Question

Does your employer offer an ESPP?

Employer stock purchase plan.

Do this

Evaluate contributing to it

With a 15% discount and immediate vesting, consider buying and selling immediately.

Question

Do you have earned income?

Required for IRA contributions. Before the tax filing date (~April 15) you can still contribute for the previous year.

Question

Is your MAGI over the Roth limits?

2026 IRS phase-out starts at $153,000 for single or head of household, or at $242,000 married filing jointly (modified adjusted gross income). This step comes after the employer match in the order.

Do this

Roth IRA after the match

After you have the employer match, evaluate a Roth IRA next. For 2026 the IRA limit is $7,500, or $8,600 if you are 50 or older (IRS). You can have both a Roth IRA and a 401(k). This is education only, not personal advice.

Do this

Evaluate a Traditional IRA

Max yearly contributions. For tIRA, consider converting to a (backdoor) Roth IRA or Solo(k). Mind the pro-rata rule on rollovers.

Question

Expecting any large, required purchases soon?

College, professional certifications, a car so you can get to work, etc.

Do this

Save for those expenses first

Park the amount needed in a HYSA, 529 plan (education) or ESA (education).

Question

Does your employer offer a 401(k), 403(b) or similar?

A retirement plan you could save more money into.

Do this

Use the self-employed route

Individual 401(k), SEP-IRA or SIMPLE IRA for benchmark pre-tax savings. Not self-employed? Contribute to a taxable account.

Question

Saving the benchmark pre-tax income for retirement?

Across all retirement accounts. 20s: 10–15% · 30s: 15–20% · 40s: 20–25% · 50s: 25–30% · 60s+: 30%+

Do this

Increase your contributions

Raise them until you’ve reached the benchmarked pre-tax income saved for retirement.

Question

Do you have children whose college you’d help pay?

Some or all of their college expenses.

Do this

Evaluate education savings options

529 plan or Coverdell Education Savings Account. Contribute accordingly.

Do this

Check education tax credits

Evaluate the American Opportunity and Lifetime Learning Credit.

You made it

From here, it’s your call

At this point you have options on how to proceed. It’s completely up to you and your personal goals.

Question

Would you like to retire early?

Do this

Max out your retirement accounts

401(k), 403(b) or other employer-sponsored account. Consider the mega backdoor Roth, then use a taxable account.

Question

Savings goals in 3–5 years or earlier?

Do this

Keep short-term goals liquid

Use HYSA, CDs or T-Bills for goals sooner than 3–5 years (low-interest debt payoff, tuition, vacation funds).

Do this

Invest longer-term goals

Use a mix of stocks and bonds for goals more than 3–5 years away (down payments for home, cars).

Finish

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