Now that you have finally gotten yourself out of debt (high five!), it’s time to shift your saving goals into high gear. First, you should redirect your former debt payments to focus on building up your emergency fund. Aim to have six months of your typical expenses saved in a safe, interest-bearing account, like a money market or savings account. Set up or increase a monthly transfer from your checking account. This is critical to prevent yourself from falling into another hole.
Once you have a cushion built, you should then clarify what you want your money to do for you in the short, mid and long-term. This may include buying a home, starting a business, paying for college or retiring before you die. For a fee, it can be helpful working with a professional who can ask you certain questions that are often neglected to help prioritize your goals and create a personalized plan. If you are willing to be a DIY-er or looking to save time and money, you can use companies like Mint, Personal Capital and HelloWallet to do some basic financial goal setting or try Voyant for more advanced, insightful planning for free.
You should focus the majority of your extra income on saving for your shortest-term goal. If you are seeking a better return than what bank CDs offer and are willing to take on a little more risk, you can open a brokerage account and invest in fixed-income investments like bond mutual or exchange-traded funds (make sure to stay away from riskier high-yield and foreign bonds!). Discount brokerages like Fidelity, Schwab and TD Ameritrade offer low fees and investment minimums and a plethora of investment options.
If retirement is important to you -- and it should be, given the state of Social Security, increasing longevity and inflation -- you should also try to contribute at least what your employer matches in your company retirement plan, if applicable, or make monthly automatic contributions to an IRA to maximize compounding, tax-advantaged growth over the long term.