Even financial experts have differing opinions as to which should come first: paying off debts or saving money? However, since our financial circumstances are different and there is really no “absolute” answer to this question, it is best to check out their benefits first.
Having savings somewhere gives you a sense of financial security that no matter what happens, you know you have money to cushion you. Even if you’re in debt and still paying off that cash loans you took last month, your savings will help you afford the unexpected events in your life.
Furthermore, saving first before paying off debts, especially building your savings for emergency fund, will help ensure that you still stay afloat despite the inflation and the personal financial crisis that you may go through at one or another.
Paying off Debts First
On the other hand, some experts point out that debts should be paid first before saving because debts typically have higher interest rates than your savings, so the longer you delay your payments, the more expensive the debt becomes.
Freeing yourself up from debts allow you to enjoy your money without having to be guilty or burdened of your past debts.
Striking a Balance
Is it possible to pay off debts and be able to save at the same time?
In fact, striking a balance between your debts and savings will help keep you sane as you go through finances, knowing that debts are being paid on time and that you have money stashed away which is available whenever it is needed.
But this could be a challenging journey especially if you’ve just started to seriously sort out your finances. In order to satisfy both worlds, you may need to look for more cash flow. Perhaps you need to take in side projects or a get a new job. Furthermore, you may need to consider reducing some of your expenses so you can throw in more money to your savings and debts.
Achieving this balance is going to be very rewarding in the long run. You may be able to eliminate your bad credit score and prevent the temptation of taking unnecessary online loans. The most important thing is to recognize that you need to both pay off your debts and be able to have savings so you can achieve a more stable financial status.