I consider prioritizing financial goals and money allocation as the most important part of financial planning. People are often faced with questions of whether to repay debt, save or invest money. If you have to choose between these goals, then your current financial situation should be your best guide
According to me, the choice is clear when you are in debt. Debts always have huge costs attached to them. If you keep carrying over your credit card debt month on month, then soon you will end up paying more interest and fees than the balance itself. That is why my advice is, if you have debt on your shoulders, then you should give the highest priority to debt reduction. In most of the cases, the returns you get from investment and savings cannot compensate for the interest and fees you have to pay for your debt.
After deducting your daily expenses, you should put most of the money is repaying your debts such as credit card bills and mortgage loan repayments. Once you have repaid your debt, then you can start thinking about investing and saving. Only at this stage, you will get to keep the returns and they will not get wasted in huge debt expenses.
But if you have no savings at all, then my suggestion would be to channel a part of your money towards savings also. If you do not have an emergency fund, then you should first pay the minimum amount you have to pay towards your debts, and rest of the money should be channeled towards your emergency fund until you build some minimum savings, say around $1,000.
Once you have minimum savings, then you can pay more than the minimum amount towards your debt and start reducing your debt. This will ensure that your back is covered by your savings while you are trying to repay your debt.
It is important to maintain a balance between your debt repayment and savings. But remember that debt reduction is a more concrete financial goal compared to saving, as there is always a temptation to withdraw savings.
Investment should be your last priority. Only when your debt is very low and you have enough savings, should you start investing. The first priority within investments should be given to a retirement fund. Only when you reach this stage of your financial planning, your financial position would be secure enough to try out other investment plans.