By Paul Feeney, Founder and Chief Executive Officer, Otivo
Everyone wants the single smartest move, the one clever thing that sets everything right. The honest answer is that there isn't a universal one, because the best step depends on your situation. But there is a widely used order of priorities that helps most people work out where their next dollar does the most good. Here's that sequence, and how to find your own place in it.
Quick answer
There's no universal smartest move, since it depends on your circumstances, but many people follow a general order of priorities. That typically runs from building a small emergency buffer, to clearing high-interest debt, to making sure essential insurance and super are in order, and then to investing. As at July 2026, the smartest step is usually the next one in that sequence for your situation.
Why isn't there a single smartest move?
Because the best step depends on where you're starting from. For someone carrying credit card debt, clearing it is powerful, while for someone debt-free with cash sitting idle, the priority is different. A move that's smart for one person is beside the point for another. That's why a useful way to answer the question isn't a single tip, but a sequence of priorities you can locate yourself within, doing the next step that fits your situation.
What is the order of priorities most people follow?
It's often described as a financial order of operations. Broadly, it runs like this, first a small emergency buffer so surprises don't derail you, then clearing high-interest debt, then making sure you have essential insurance and that your super is on track, and then investing spare money for the longer term. The idea is that each step builds a foundation for the next, so working through them in order tends to do more than jumping ahead.
Why does a buffer usually come first?
Because without one, everything else is fragile. A small emergency buffer stops an unexpected cost from pushing you onto high-interest credit or forcing you to sell investments at a bad time. It's not glamorous, and it earns little interest, but it protects every step that comes after it. That protective role is why building even a modest buffer tends to be the sensible starting point before tackling debt or investing.
Where do debt and investing fit?
After the buffer, high-interest debt usually comes next, because clearing it delivers a guaranteed return equal to the steep interest you're no longer paying, which is hard for investing to beat. Once expensive debt is gone and your insurance and super are in reasonable shape, investing spare money for the long term generally moves up the list. Lower-interest debt, like a mortgage, can often be balanced alongside investing rather than cleared first, since its cost is lower.
How do you find your own next step?
By locating yourself in the sequence. Look at where you sit, do you have a buffer, any high-interest debt, adequate insurance and super, and the next smartest move is usually the next unmet step in the order. It's a framework rather than a personal recommendation, since your circumstances shape how it applies, but it turns an overwhelming question into a manageable one. For the longer-term steps in particular, modelling your position helps you see the impact.
Frequently asked questions
What should I do with my money first?
Many people start with a small emergency buffer, then clear high-interest debt, then make sure essential insurance and super are in order, then invest. The smartest first step is usually the earliest unmet one in that sequence for your situation.
Should I pay off debt or invest first?
Generally high-interest debt is cleared before investing, since avoiding a steep interest rate is a guaranteed return that's hard for uncertain investment returns to beat. Lower-interest debt can often be balanced alongside investing.
Is there one best thing to do with my money?
No single move suits everyone, because it depends on your circumstances. A general order of priorities, buffer, then debt, then insurance and super, then investing, helps most people find their most useful next step.
Where to from here
Finding your next step is usually smarter than hunting for one clever trick. Otivo, a licensed Australian financial advice platform holding AFSL and Australian Credit Licence No. 485665, offers a retirement planning module and other advice tools that help you see where your next dollar does the most good, based on your income, debts, age and goals. It helps you locate your own next step.
Sources
- ASIC MoneySmart — managing your money and priorities — moneysmart.gov.au
Disclaimer
The information in this communication is current as at July 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.