Paying Off Debt vs Saving: Tips to Help You Achieve Both

Paying off debt vs saving can be overwhelming at times, but it’s an essential part of your financial well-being. However, with some discipline and smart financial decisions, it’s possible to achieve both goals.

CCCU has some valuable tips to help you navigate your financial priorities and find a balance between paying debt and saving money that can work for you.

Make a budget

Your budget is an essential element of the planning process – knowing how much money you earn, save, and spend gives you a clear vision of how you can prioritize paying off your debt and still save for your emergencies.

As you make your budget, list down all your expenses including your bills, debts, and saving goals. This information will help you understand where your money is going and where you can cut back.

Prioritize debt payments

Once you’ve identified all your debts, it’s important to put them in the order you plan to pay each one off. Is it by the highest interest rate or balance? CCCU recommends either doing a snowball or avalanche method to help you tackle them. Read more on Four Strategies for Managing Debt as a Young Adult.

Create an emergency fund

Make a plan to have funds set aside for unexpected expenses. The last thing you want to do is pull out a credit card to cover those expenses and add another debt to your list. Aim to save three to six months' worth of your living expenses in your emergency fund. Remember, even if you can’t save at the recommended level, it's still better to have at least some funds tucked away for emergencies.

Navigating your financial priorities with overwhelming debts can interfere with your saving goals. With a plan that you can stick to, you will be on your way to achieving financial stability. No matter what life brings you, CCCU is here to help you every step of the way. Visit www.CCCULV.org for more financial resources and follow on social media for daily financial tips – Facebook, Instagram, X (formerly Twitter).