The Money Hierarchy: Where to Put Every Pound You Earn

Not sure what to do with your next pound? This is the order. Don't move to the next step until the current one is done. It sounds simple — because it is.

Note:These steps aren't perfectly sequential for every situation — but following this order eliminates the most expensive mistakes. Get one step solid before you stress about the next.

Cover your basics

Know your minimum monthly number — your fixed costs. Every pound you earn must cover this first. If it doesn't, this is your only job right now. Work out what it costs you to exist: rent, food, bills, transport. That number is your floor.

Build your £1,000 starter buffer

One month your card reader breaks down, the next your boiler goes. A £1,000 buffer in a separate easy-access account shields you from having to reach for debt every time life happens. Keep it separate so you're not tempted to spend it.

Clear high-interest debt

Any debt above roughly 5% interest is costing you more than savings ever earn. Credit cards, buy-now-pay-later, personal loans — pay these off aggressively before you invest anywhere else. You can't out-invest a 20% interest rate.

Max your workplace pension contribution

If you're eligible for a BECTU or Equity scheme, contribute enough to get every available benefit. Employer contributions are free money — the most reliable return you'll ever get. Use it before anything else.

Build your 3-month emergency fund

Three months of living expenses in an easy-access savings account. This is your financial firewall against quiet periods — and in this industry, they will come. It's what lets you turn down bad work and wait for the right job.

Sort your tax pot

Every payslip or invoice, move the right percentage straight into a separate account. This is not your money — HMRC will want it. Keep it safe, keep it earning interest, and never touch it for anything else.

Max your ISA

£20,000 per year in a stocks & shares ISA. Tax-free growth, tax-free withdrawals — this is the first place any investment money should go. Once it's in there, the government can't touch the gains.

Read the ISA guide

Increase pension contributions

SIPP contributions are tax-efficient, especially for Ltd company directors who can contribute through the company and reduce corporation tax. Aim for 15%+ of income going to long-term savings in total.

Invest beyond the ISA

Once your ISA allowance is maxed, a General Investment Account (GIA) is the next step. Same principles, same funds — just with tax on gains above the annual exempt amount. You've already done the tax-advantaged work first.

Think about legacy and protection

Will, Lasting Power of Attorney, life insurance, income protection, inheritance tax planning. At this point you've built something worth protecting. Make sure the people you care about are covered if something goes wrong.

Which step are you on right now?

Take the Financial Health Quiz to see exactly where you stand — and what to focus on next.

Take the quiz