What should you do with your next $1,000?
Answer a few questions and you get one answer: the single thing worth doing next. Not a list of ten. Built for Australian rules, so super, HECS and the first home schemes sit where they actually belong.
Not sure where you are on it?
Answer a few questions and we will stop at the first step you have not cleared. That one is your answer.
Step 1 of 11
Do you know roughly where your money goes each month?
Not to the dollar. Just whether you could name your three biggest non-rent expenses.
Where is HECS-HELP in all this?
Deliberately absent. Indexation now follows the lower of CPI or wage growth, and balances were cut by 20%, which makes it the cheapest debt most Australians will ever hold. Paying it down early almost never beats the steps above. The exception worth knowing: it reduces how much a lender will give you, so it does matter if you are buying property soon.
Why the order is the order
The sequence is not a ranking of what matters most in life. It follows what each dollar earns you, from the most certain return to the least.
Clearing a credit card at 20% is a guaranteed 20%, after tax, with no market risk at all. Consolidating super is a guaranteed saving on fees you were paying twice. Nothing further down the list can promise anything like that, which is why they sit above investing rather than below it.
After certainty comes access. An emergency fund and a home deposit are money you might need within a few years, so they belong somewhere boring rather than in shares. Only once the certain wins are taken and the near-term money is safe does it make sense to take real risk, and only after that to lock money away for a tax break.
Three calls we made differently, and why
This is not the American flowchart with the spelling changed. Australia has compulsory super, HECS-HELP and franking credits, and they change the order. Three of our departures are worth naming.
HECS-HELP is not in the repayment order
Indexation now follows the lower of CPI or wage growth, and balances were cut by 20%. Repayments come out through the tax system once you earn above the threshold, currently $69,528. It is, for most people, the cheapest debt they will ever hold, and voluntarily accelerating it rarely beats anything above it on the list. The exception: it reduces your borrowing capacity, so it matters if a mortgage application is coming. Run your own numbers.
Investing outside super comes before extra contributions
This is the call most likely to raise eyebrows, and we will stand behind it. Most of the people reading this are decades from preservation age. Locking extra money inside super at 28 is a real cost, not a theoretical one: a deposit, a career change, a stretch of self-employment or a family can all need capital well before 60. The concessional tax break is genuine, and the illiquidity that comes with it is usually understated. If you are in your fifties, flip the two steps.
We do not answer “pay down the mortgage or invest”
The step raises it and points at the comparison. Paying down a 6% loan is a guaranteed 6% after tax. A diversified portfolio has historically done better over long periods, with no guarantee and plenty of falls along the way. The right answer moves with your rate, your tax position and what you can hold through without selling. We would rather hand you the framework than pretend there is one answer.
What this is not
It is general information, not financial advice, and not a substitute for an adviser who can see your whole situation.
The order is a sensible default for someone with regular employment income and no unusual complications. Plenty of situations justify departing from it: an inheritance or redundancy payment can clear several steps at once, irregular self-employed income makes the emergency fund matter more than the list suggests, a partner changes the household maths, and anything involving trusts, a business or estate planning is beyond what a flowchart can hold.
Skip a step because you decided to, not because you did not know it was there. That is the entire point of writing the order down.
Frequently asked questions
Where does HECS-HELP fit in the flowchart?
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Nowhere in the repayment order, and that is deliberate. Indexation follows the lower of CPI or wage growth, repayments happen automatically through the tax system once you earn above the threshold, and balances were cut by 20%. For most people it is the cheapest debt they will ever hold, so paying it down early rarely beats the steps above it. The exception worth knowing: your balance reduces how much a lender will offer you, so it matters if you are buying property soon.
Should I pay off my mortgage or invest?
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There is no universal right answer, and the flowchart does not pretend otherwise. Paying down a 6% loan is a guaranteed 6% after tax, which is genuinely competitive. A diversified portfolio might beat it over a long enough period, and might not, and you have to hold through the falls to find out. It depends on your rate, your expected return, your tax position and what you can sit through without selling. The step poses the question and links to the comparison.
Why does investing outside super come before topping up super?
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Because super is locked until preservation age, which is 60 for most people. If you are 28, that is more than thirty years of not being able to touch it. The tax break on concessional contributions is real and worth having, but it is easy to understate what illiquidity costs when a house deposit, a career change or a period of self-employment may come first. If you are in your fifties, flipping those two steps is entirely reasonable.
Do my partner and I follow the same flowchart?
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Broadly, but work through it individually first: your own buffer, your own expensive debt, your own super. Then look at the household. Some steps interact once you do, since contributing to the lower earner's super can be tax-effective, and both HECS balances count against you when you borrow together. Beyond the basics, an adviser can model the household picture properly.
What if my situation is unusual, like an inheritance or redundancy?
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The order assumes regular employment income and no windfalls. A lump sum can let you clear several steps at once and move straight to the later ones. Self-employment pushes the other way: irregular income makes the emergency fund matter more, and six to twelve months is a fairer target than three. For anything with tax, estate or business structures in it, treat this page as a conversation starter rather than an answer.
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General information only, not financial advice. This order is a sensible default, not a rule, and plenty of situations justify departing from it.