The Money Guy Show: Financial Order of Operations

The Money Guy Show, hosted by Brian Preston and Bo Hanson, is one of the more popular podcasts out there today when it comes to personal finance. Much like Dave Ramsey’s Baby Steps, these guys constructed a step-by-step system for people to create wealth. This nine-step process was coined The Financial Order of Operations; or more commonly referred to as the FOO.

There are a few ground rules to keep in mind throughout the entire process of following the FOO:

1. Being generous and charitable are important no matter what step you are in.
2. “Bedazzle your basic life” so that you can enjoy your life today, while still putting an emphasis on saving and investing for the future
3. The FOO is not a straight line. Bumps in the road inevitably will cause you to move back and forth throughout the steps. Don’t despair! Keep going!

I have always found The Money Guy Show to be very entertaining and informative. Oddly enough, this was the very first personal finance podcast I ever stumbled upon. The intention of this post is to explore the steps of the FOO, and to identify the areas which a Savvy Solo can best utilize this method.

Let’s dive in and get more FOO for you!

Save up enough cash to have your highest deductible covered. Check all of your insurance carriers to double check, but many people will find that their health insurance is the one that has the highest deductible. For some, it might be their home or car insurance. Don’t save up cash for all of your deductibles (we’ll get those covered later on), just the highest one for now.

As a baseline you’ll want to have enough cash saved up in the case of the worst financial event occurs. If you suddenly fall ill or get into a car accident, having this money in savings will prevent you from falling into debt. Dave Ramsey suggests saving $1,000 here. Your highest deductible will likely be a little more than this, particularly if you have dependents on your health insurance coverage.

SDB Take:

I love the theory here, but still, I prefer the idea of saving up enough for one full month’s fixed costs instead. It’s certainly better than saving only $1,000; but I’d like to see more cushion here. Yes, with this strat you’ll have enough to cover an unfortunate event, but what about the case of the ultimate unfortunate event?

Job loss can occur at any time for any reason, especially if treading in the muddy waters of an uncertain economic climate (like a recession). Having one full month cushion to get some level of income rolling back in will allow for a level of comfort that should combat a rash decision when put under pressure. Take this into consideration if you, like myself, are a Savvy Solo with only one source of income.

Get that employer match!!! In many cases an employer match might consist of 100% match up to a certain percent of your salary. In other cases, it might be 50% match or a combination of the two. This might look like: 100% match up to 3% of salary, then 50% match on the next 3% of salary. If this is the case, you’ll want to contribute 6% towards your employer sponsored retirement plan.

Even if you are drowning in credit card debt at a 20% interest rate. The employer match is an immediate 100% or 50% return! That’s not even factoring in the long-term result of compound interest, which can result in literally years of income in retirement depending on your age and salary. Don’t leave this free money on the table, take this match no matter the financial situation!

SDB Take:

I love this step so much, that I personally would put it at step 1. If you are hired by a company that offers a company match of any kind, start that contribution immediately! Even if you don’t have a dime to your name yet! A 50% or 100% return cannot be found in a safer way, take advantage of this opportunity while you can. Brian Preston mentions that ESPPs (employee stock purchase plans) should be considered at this step, I’d say consider these options down the line.

Let’s say you are in a rough financial situation when you are hired. You are in high interest debt up to your eyeballs, bills that need to get paid as soon as possible, the 401k offered has high fees, and… hey we still gotta eat right? I still want you taking the match that’s being offered. 5% of your salary isn’t going to have a huge impact on your immediate future, but it’s going to have a tremendous impact on your long-term future! We are going to tackle all of these financial headaches in the next step but get this match now!

In the event that your personal financial situation gets so out of control that you consider bankruptcy, most people are generally allowed to keep the funds they have stashed away in a 401k. Quick note here: bankruptcy should be treated as a last case option (plan Z if you will), and almost never a smart overall financial move. Of course, consult a financial professional before attempting, but in many cases, you can still keep your retirement funds (along with the match) if things get completely out of your control. If you are legitimately at a point in your life where bankruptcy is looking to be an option, you might as well get some of your assets protected.

Here we go! We have a small baseline of cash saved up, we are getting that employer match, now it’s time to aggressively and unapologetically attack that high interest debt! The Money Guy Show doesn’t mention a specific % that would be considered high, but generally speaking anything costing you 8% or more is usually considered high interest. Check out this post for some different strategies on paying down debt.

Brian and Bo get into more detail on this step. A high interest mortgage, for example around 7%-8%, would generally not be considered high interest debt. The appreciation of the home will offset some (most likely not all) of the interest you are accruing in the long run. Also, mortgage interest may be tax deductible in some cases. Most people aren’t going to need to worry about paying off the mortgage in this step.

So, what about a 0% interest rate credit card? Yes, technically this is below 8%… for now. Any of these cards that currently have a 0% rate are only offering it temporarily and will likely shoot up to north of 20% after a few months. Treat this debt as high interest and get rid of it now. The order of which you pay down debts is up to you but complete this step before moving on to the next.

SDB Take:

Couldn’t have said it better myself Money Guys! Once you have a base level of cash saved up and are getting that company match, get after that high interest debt with reckless abandon! Again, utilize whichever method will motivate you the most.

Once you start with a specific debt (i.e. a car loan), don’t stop focusing on that debt till it’s completely paid off. Once that car loan is paid off, you can decide to change which next debt to pay off. But, in general, don’t worry about the mortgage for now, let’s get rid of these pesky expenses from past experiences.

It’s time to build up a full 3–6-month emergency fund! This $ amount should be calculated by your expenses, not your income. They mention that the original cash saved up for your highest deductible (in step 1) gets mixed into your emergency fund. Essentially, a full emergency fund will be able to cover multiple deductibles at once (heaven forbid), so don’t worry about having a separate savings for that. Just make sure it’s all in a high-yield savings account (HYSA).

SDB Take:

Love this step, I only throw in a couple caveats for the Savvy Solo. Consider the ultimate goal of keeping your emergency fund at a full 6-9 months during your wealth accumulation phase. I wouldn’t think it wise to build a full 9 months of expenses before investing, but most at this part should be allocating their funds in different areas simultaneously.

In general, I want to keep that one month cushion of expenses in my checking account at all times, but that’s just me. Maybe at this juncture you decide to go full force on the emergency fund till you hit 3 months. From there you can divvy up between emergency fund, bucket funds, and Roth IRA. Who knows, maybe you want to hit the 6-month mark as soon as possible because your job security is looking a bit shaky. There is no best savings strategy for everyone but check out this post to get ideas.

The Roth IRA and HSA are both very powerful investment vehicles, max these both out before moving to the next step. If your income is too high to directly contribute to a Roth IRA, they suggest considering a backdoor Roth strategy. Obviously, this can get tricky (especially if you already have funds in a traditional IRA), so consider consulting a financial professional before attempting.

SDB Take:

Nailed it yet again Money Guys! I can’t shut up about the Roth IRA, this is where most people should look to invest after getting that company match on their employer sponsored retirement plan.

You’ll need a high-deductible health plan (HDHP) to enroll in an HSA. The HSA is triple tax advantaged and should be considered by absolutely everyone! Check out this post to get a little more insight on HSAs and FSAs. The average retiree pays north of $200k in out-of-pocket medical expenses, don’t be afraid to load this bad boy up!

Now that we have maxed out the Roth IRA and HSA, we turn back to our employer sponsored retirement plan and max this one out as well! This may include a 401k, 403b, a 457 plan, or others. Check out this post on retirement vehicles for a better understanding of what each one may offer.

Maxing these out may be difficult for some, in 2025 the contribution limit for those under the age of 50 is $23,500 (add $7,500 for those over 50, or $11,250 for those 60-63 for “super” catch up contributions). Brian and Bo state that even if your employer sponsored plan isn’t with one of the low-cost investment firms, it’s still wise to complete this step before moving on to the next.

SDB Take:

Saving for retirement is absolutely important, which is why I personally stress to most about getting that company match and maxing out the Roth IRA and HSA. Beyond that, your next investment dollar is going to really depend on your goals.

Sure, the first place we should look is back to the 401k (or the like). The tax advantages on these accounts are amazing! Still, if someone is looking to retire early, it might be wise to put that sum into a taxable brokerage account. Or maybe this is where we start stock piling cash in a bucket fund to save for a downpayment on a house. Or, even better, let’s get a 2-year cash runway in a HYSA so we can start that business we always dreamed of.

Personally, I like the freedom that a taxable brokerage account has for most Savvy Solos. The things we enjoy, and the goals we shoot for, are going to change at ages 30,40, 50, and even 60. Your investments should line up with whatever goals you have in mind, sometimes that means having wiggle room for future change. This is especially true if your current employer sponsored retirement plan has high costs, and/or if you have already reached Coast FI.

This is where the real wealth gets generated! After maxing out all of our retirement options, it’s time to do the math and make sure we are investing a minimum of 25% of our household income. Beyond the current retirement accounts, this can be done through the mega backdoor Roth strategy and/or a taxable brokerage account.

The Money Guy Show emphasizes how important it is to utilize all 3 buckets of investment vehicles when reaching this stage. These include your pre-tax accounts (401k, 403b, etc.), post-tax accounts (Roth IRA, Roth 401k, etc.), and standard taxable brokerage account.

SDB Take:

I love that these guys are pushing for everyone to reach a 25%+ savings rate. Others out there might feebly whimper “15% for retirement please…” Not these guys! “25% OR YER DEAD TO ME!” Just kidding 😂.

In all seriousness though, 25% savings rate should be the goal (if not better) for most. If you aren’t there yet, it’s ok! It’s just time to put things in action that can get us there sooner than later. Don’t forget, with the power of compounding interest (insert superhero theme song here), the sooner we get our money invested the better!

It’s time to save for your children’s college! After we are saving 25%+ of our household income towards our own retirement, we can look down the road at some of the bigger dreams of ours. When it comes to legacy building investments, we are going to look to utilize a 529 plan, UGMA/UTMA, or custodial accounts to build wealth for the next generation.

This is also where we may look into purchasing a vacation home, start a business, plan a mini retirement, or get into investing in real estate! We are already investing 25%+ of our household income, the world is our oyster!

SDB Take: GO AHEAD AND SKIP THIS STEP ENTIRELY SAVVY SOLOS!!! 😁

You’ll notice I said the same thing about Dave Ramsey’s Baby Step 5. 😂

What I actually like about this step is where it is placed, I just want to endorse that this step is highly optional. It is not your duty to pay for your child’s college tuition! It is, however, your responsibility to teach your children about personal finance to the best of your ability. From that point if you choose to fund their secondary education regardless of what I say, utilizing a 529 account at this stage in your financial journey would be the smart move.

As for getting involved with real estate investing, planning to start a business, or going on a mini retirement; I would have recommended saving/investing for those things a few steps back if that was part of the overall plan. I love that these guys push a high savings rate, but it should be going towards your own personal core values and the goals you have in mind for the future.

Alright, it’s time to tackle the big momma! Let’s pay off that mortgage once and for all! We are also going to get rid of any other low-interest debts that have been hanging around. Still have a student loan hanging around? Get rid of that one right now. Still on that payment plan at 3% when you bought furniture 10 years ago? Make it gone!

At this stage, we want to get completely debt free! With absolutely no debts in the world, and our housing paid for, it’s time to enjoy life like nobody else!

SDB Take:

I do like that we are going to plan to pay off the mortgage before retirement. Studies have shown that retirees without a mortgage are much happier in general than those that still have one. It’s my personal plan to have any and all debts completely closed prior to stopping any income.

Student loans and other debts are still hanging around though? Personally, I would have addressed those at an earlier stage. Obviously, you should be paying off all of your own student loans before you consider putting money into a 529! 😂 The same is true for any other pesky debt that hasn’t been taken care of yet.

If you still have mortgages on your investment properties, or a low interest business loan as an entrepreneur, I would tackle those before you pay down the mortgage on your primary residence. As stated earlier, the mortgage on your primary house may have tax benefits, but ultimately, we want to tie up all these lose ends before fully jumping into our golden years!

I love The Money Guy Show!

It’s def a reco from me for anyone, Savvy Solo or otherwise, who wants to get a better understanding of investing and have a few laughs along the way. While I don’t generally believe in a blanket financial plan for everyone, the FOO is probably the one I agree with the most. Just a few tweaks here and there helped me come up with my own strategy, and maybe that’s the point of this thing to begin with!

If a Savvy Solo suddenly comes into a windfall and isn’t quite sure where to put it, I’d highly recommend funding Single Dollar Bill! 👀😶🤪😂 No? Alright well if that’s the case, take a look at where you are on the FOO, and put it towards that next step!

FOO me? FOO you! Everybody FOO! 😁

Stay classy Solos! ✌️