Everyone jumps straight to "how do I invest?" but that's actually not the first question to ask. Before you put a dollar into the market, there are accounts you need to have set up — not because some finance rule says so, but because the order genuinely determines how much you keep.

These are the 5 accounts I set up (in this order) before I invested anything. They're not optional.

Account 1 — Checking Account (The Hub)

This is the account your paycheck hits and your bills come out of. If you have multiple checking accounts doing different things, pick one to be your primary hub. Everything flows through here.

You don't need anything fancy. What matters is: no monthly fees, no minimum balance requirements. Ally, Chime, and SoFi all work. Big banks like Chase work too — just watch for hidden fees.

Account 2 — High-Yield Savings Account (HYSA)

A regular savings account at your bank is probably earning 0.01% interest. A high-yield savings account earns 4–5% right now. On a $5,000 emergency fund, that's the difference between $5 a year and $200+ a year — just for having money sit there.

Open this at a separate institution from your checking — I use Ally. The slight friction of transferring money actually helps you not touch it.

smobyday tip

Build 3–6 months of expenses in this account before you invest anything. I know you want to invest — but an emergency without savings means pulling money out of investments at the worst time. The HYSA is the foundation.

Account 3 — Roth IRA (Tax-Free Retirement)

If your employer offers a 401(k) match, grab it first (that's free money). But after that, a Roth IRA is almost always the move. You contribute after-tax dollars, and everything grows completely tax-free. When you retire, you pay zero taxes on it.

Open this on Fidelity or Vanguard. You can contribute up to $7,000/year in 2024. Even putting in $100/month gets you started.

Account 4 — 401(k) (If Your Job Offers It)

If your employer matches contributions — say, 50% up to 6% of your salary — that match is part of your compensation. Contribute at least enough to get the full match before anything else. Anything beyond the match, I personally prefer the Roth IRA for its flexibility.

Account 5 — Taxable Brokerage Account (Everything Else)

Once your Roth IRA is maxed out, a regular brokerage account is where excess money goes to invest. No contribution limits, no rules about when you can withdraw. This is where I buy more VOO or FXAIX after maxing my Roth every year.

smobyday tip

This order — emergency fund → Roth IRA → match → taxable — maximizes tax advantages first. You're not leaving free money on the table, and you're not paying taxes on growth you don't have to pay taxes on.

Use This Prompt to Figure Out Your Order

Your situation might be different — income level, employer benefits, debt. Paste this into Claude and get a personalized breakdown:

AI Prompt — Account Setup Plan
I'm trying to figure out which financial accounts to open and in what order. Here's my situation: - Monthly take-home income: $[amount] - Monthly expenses: $[amount] - Current savings: $[amount] - Do I have a 401(k) with employer match? [yes/no — and what's the match?] - Do I have high-interest debt (credit cards, etc.)? [yes/no] - Am I in a high or low tax bracket right now? [your guess] Based on this, what accounts should I open, and in what order? Should I prioritize a Roth IRA, HYSA, or something else? Please explain why for each recommendation.