It's also helpful to understand how the economy works as part of this talk about money.
If we think of money as sitting across a giant line:
1....2....3....4....5....6....7....8....9
Where 5 would be neutral where the value of the $ stays the same across time, then 6-9 are earning more value and $, but at some risk. and 1 would be losing loads of money, like say through debt.
Debt is generally terrible, because not only are you paying off the $'s you borrowed, with interest, you are also losing real value for that money through inflation.
In the USA, the Government (Federal Reserve) has said they hope to keep Inflation at a stead 2%/yr forever. So it's safe to assume 2% Inflation will happen every year.
so for $1,000 of money you have, every year $20 of it just goes poof, and vanishes. So whenever you are holding cash anywhere(like say in your checking account) if you aren't earning 2% interest on that money, you are losing value of that money. For a debt, you are losing 2% plus your interest rate, plus any and all future earnings you could have been making instead. This is why debt is usually terrible. The possible except is when the debt is being invested in things that MAKE YOU MONEY. otherwise the debt is a terrible investment. It might still make sense to do, but hopefully you do it eyes wide open, knowing what a terrible waste of your money it is.
For every investment, there is someone somewhere giving you the money you are earning, so for every $1 you make in an investment, someone else out there is losing $1 to you. This is why making money can be so hard, because almost everyone wants to keep the money they have.
So, let's go through your line above, and categorize investments across them.
1. would be credit card debt, as it's usually 15-20% interest, a close second would be payday loans, and places like that, which tend to hover around 10%, but sometimes their interest rates can be as high as 30-50%!
2. would be auto loans, personal loans, etc. These tend to be much lower interest rates, just a few % above the Federal Reserve rates.
3. would be your mortgage, student loans and the like, as generally your interest is quite low comparatively, and your debt is making you money in the end. Your house value should slowly go up in value over time, and hopefully for at least the amount your interest rate is. Same with your student loans, if you are smart and strategic in taking them, they can position you to be worth more income in the future, and so could be categorized as making you money.
4. would be your typical checking or savings account, where you might make 1/2 of a percent(.5%) or less on your money, or they charge ridiculous monthly maintenance fees or the like. You are literally losing value with your money in these accounts.
5 . would be a fidelity CMA or a HYSA, and other cash equivalent investments that earn ~ 2% or whatever inflation is. I.e. you are barely keeping up with inflation, but aren't actually making any money. A steady state. Not a terrible place to be, but not a place you want a lot of money.
6. is where Money Market funds(MMF), treasury bills, CD's and other high-income cash equivalents tend to live. In general you make a bit over inflation, but not a lot. These things are called "cash equivalents" because in general they can be very quickly turned into cash, and are basically as-risky as holding actual cash. I.e. very little to no risk.
7. is where actual risk starts to happen, this can be long-term, very safe bonds, personal loans to people you trust, etc. high probability you will make what is promised, and won't lose anything, even if things get very bad.
8. are diversified, broad, index funds, like FSKAX, VTSAX S&P500 funds and the like. These investments are generally pretty safe over long time periods, and make 4-8% a year on average. There is zero gaurantees on these investments, and over any given period, tend to fluctuate wildly. It's quite common to go to bed one day with $1,000 and go to bed the next day with $900 of value. You shouldn't pay attention to these short term fluctuations, what matters is their long-term, 5+ year averages(of 4-8%/yr), and in general one should be invested for DECADES, if not most of their adult life.
9. is where you invest in individual stocks, day trading, options trading, shorts and any specialized funds and the like. These basically equate to gambling level risk. They might have a touch better odds than playing roulette at your local casino, but probably not by much. This is where people either make a killing or lose everything they put in. If you want to play with these investments, at least treat it like you would playing roulette or blackjack at your casino, and only use "fun" money, stuff you are totally OK with losing.
I won't cover any more on 9, there are entire websites, forums, etc all about these things. Go there to learn the ropes on how to gamble with your money.
Smart money is to play in the range of 5 through 8, and leave the rest for people with too much time and money on their hands. Warren Buffet stays in 8 usually and plays in 9 very very carefully, and is all about bringing 9 down into the realm of a level 8 investment. Jack Bogle(invented Vanguard) helped create level 8, for the rest of us :)
levels 5 and 6 should be for your emergency fund and for money you need for day to day living. 7 and 8 is where we will invest for our future earnings (typically retirement) and is for investments 5+ years away(as playing in these levels for shorter than 5 years has a tendency to not go very well.)
So how much money should you put where?
This is also called an Investment Plan, or IPS. Lots more on the topic is available at the Investing page. But I'll sum it up here:
As much money as possible should be in 8, low cost diversified index funds, like FSKAX/FZROX or FXAIX/FNILX. That is where all the growth tends to be. Ideally 100%, but that can't happen in reality, as we need some money to pay for yummies in our tummies, and roofs over our heads.
I recommend 1-3 months in the account your bills get paid from(typically a checking account, or a Fidelity CMA if you are me). I personally hold 1-ish. That gets you through any short term funding issues, like a sudden bill you didn't know about, etc.
Then you can hold the rest in #8 above, or you can take a more conservative approach and hold some in 6 and 7 above. For the more risk adverse, I'd recommend thinking about 3-6 months of expenses(an "emergency fund") in #6, and maybe 1-5 years worth of expenses in #7 above(aka bonds). Personally I currently have no Emergency Fund and no bonds.
As you move from accumulation stage and want to start living off of your investments, then I'd recommend having 5-10 years(if possible) in safer investments from 5-7. That way in a very bad time in the stock market, you can live off of your safe money, and give your stocks time to recover. After they recover, you sell some stocks and re-fund your bonds.
Your relationship with a bank.
In Commonwealth (which includes the UK, Canada, Australia etc.) Foley v Hill (1848) still holds, which contains this absolutely lovely passage:
Money, when paid into a bank, ceases altogether to be the money of the principal; it is by then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it. The money paid into a banker’s is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains to himself, paying back only the principal, according to the custom of bankers in some places, or the principal and a small rate of interest, according to the custom of bankers in other places. The money placed in custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal; but he is, of course, answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands. That has been the subject of discussion in various cases, and that has been established to be the relative situation of banker and customer, the banker is not an agent or factor, but he is a debtor.
### Money a definition.
Money could be considered a debt.