The Sustainable Money Hierarchy: A Practical Blueprint for Your Financial Life

Good financial decisions are much easier when done in the right order.

Perhaps the first challenge in personal finance is not knowing what to do, but rather what to do first. The reality is, you cannot clear debt, invest in the stock market and save for a house all at once. When you try to approach it in this way, you can easily become overwhelmed and left wondering how you will ever conquer your finances. 

The solution lies in a universally accepted hierarchy of wealth.

If you are trying to figure out how to become wealthy and have no clear path, then you have come to the right place! In this article we’ll walk through, step by step, a clear, orderly hierarchy that you can follow in the coming months and years, leaving you in no doubt as to what to prioritise on your journey.

Join us, as we walk through this step by step hierarchy of wealth.

Step 1 — Eliminate High-Interest Debt

Before building wealth, stop the leaks.

High-debt interest is the kryptonite of financial progress. Your first task is to identify any outstanding high debt interest you may be paying such as:

  • Credit card
  • Payday loans
  • Store finance

The problem with high interest debt is that the interest can be high, really high. Credit cards are not uncommon to charge 20-30% interest a year. Additionally, and unfortunately, the law of compounding also applies to debt, thus potentially sending you into a debt spiral. 

Therefore, your absolute first priority is to clear any high interest debt. Use this approach:

  • Cover your minimum payments
  • Tackle one debt at a time. Either:
    • Hit the smallest balance first
    • Or hit the highest interest first

Note: Mortgages and student debt typically fall outside of this first rule.

Step 2 — Build an Emergency Fund

This is your financial safety net – to cope with life’s curveballs

Having cleared your debts, before you even think about investing, you must set aside some cash for any emergencies. Life can be unpredictable, and regardless of your personal situation, you will need a cash safety net should those unexpected events happen. Examples include: job loss, medical costs, boiler breakdowns, car repairs etc. 

Why this step matters:

  • It prevents you falling back into debt
  • It protects any long terms investments you may have made
  • Reduces your financial anxiety

Sustainable-Money’s rule of thumb:

  • Aim for 3–6 months of essential expenses (minimum)
  • Keep as cash in an easy access savings account (ideally one with good interest!)
  • Build it gradually but consistently – every penny counts, get it built!

Your emergency fund is non-negotiable and essential to help handle whatever life might throw at you.

Step 3 — Protect Yourself: Insurance & Basic Risk Management

The forgotten step – until you need it

Whilst perhaps not a direct step to building wealth, it is a critical step none the less that you cannot afford to ignore. 

Insurance isn’t glamorous, and ultimately it costs money. But once you’ve cleared debt and have an appropriate buffer in place, you must absolutely ensure you have the right insurances in place. Insurance can stop a crisis becoming a complete catastrophe. 

Everyone’s personal situation is different, but here are the fundamental insurance types you need to consider.

  • Health insurance (especially for US readers!)
  • Income protection
  • Life insurance (for those with dependents)
  • Home and contents insurance 
  • Car insurance 

Whilst paying for this might feel like a pain, it prevents your life savings being wiped out and plunging you into debt. 

Step 4 — Invest in a Pension (401k / Workplace Pension / SIPP)

Plan for long term wealth now – it’s much harder later

With your foundation in place, you can now focus whole heartedly on your journey to long term wealth. One of the most tried and tested ingredients for building wealth is time. It’s your greatest asset and you must use it by taking your pension seriously.

Here’s why you should prioritise your pension before general investing:

  • Often your employer will match contributions (401K in the US, workplace pension in the UK).
  • Tax advantages – often money paid in from your wages before tax, reducing your overall taxable income.
  • If you start early, you can maximise compounding over decades

Minimum goals:

  • Ensure you contribute enough to get the full employer match (it’s free money for you!)
  • Overtime, aim to build up to saving 10-15% of your annual income into your pension.

Whether it’s a workplace pension, SIPP, 401K, Superannuation or any other type of pension, this is your first port of call for developing long term wealth. 

Step 5 — Build an Investment Portfolio (ISA / Roth IRA / Brokerage)

With the essentials in place, it’’s time to accelerate wealth

Now your foundations are in place, and you’re already saving for retirement, now is the time to focus on accelerating your path to wealth by building a long term investment portfolio. 

To start with, pick a tax efficient wrapper:

  • UK: Stocks & Shares ISA
  • US: Roth IRA (or a traditional IRA)

Typically a pension is your priority, given that many employers often match contributions. However, once you have achieved the maximum amount of matching, a tax efficient account is your next port of call.

You invest money you’ve already paid tax on, and when placed in a tax efficient account, usually any capital gains or income earned are also tax free. Typically these accounts are also entirely flexible, meaning that you can withdraw the money any time without penalty (generally). 

Here’s some simple rules when building a portfolio as a beginner:

  • Use low cost index funds or ETFs 
  • Diversify globally
  • Set up regular monthly contributions (but watch out for hidden fees!)
  • Set a time horizon of minimum 5+ years

This is the critical step that takes your financial situation from “stable” to “growing”.

Final Thoughts

The hierarchy we’ve just discussed is tried and true, and is centred around a single principle: 

Build a strong foundation first, then grow from there. 

The key to wealth when starting from scratch is not trying to do it all at once, it’s impossible. You must have a sound financial strategy that you can follow step by step, and this model provides just that. As a reminder:

  • Clear high interest debt first
  • Build an emergency fund
  • Obtain the right protections
  • Invest in your pension
  • Build an investment portfolio in a tax efficient wrapper

By taking a structured approach to wealth, you increase your financial resilience. This approach will quickly turn into a habit leading you to make better financial decisions and hugely reduce your general stress and anxiety. Even if you’re not there yet, you have taken the first step in gaining the knowledge you need to achieve real wealth. 

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