Should You Save or Pay Off Debt First?

A smart money strategy for young professionals who want to do both!

Have you ever felt torn between saving for the future and paying off debt now? You’re not alone.

Many young professionals ask this same question and the good news is, you don’t have to choose one or the other. You can (and should!) build savings and pay down debt at the same time.

Here’s how to do it strategically:

Step 1: Get clear on your full financial picture

Before you make a plan, you need to know how all your numbers stack up first.

Start by listing:

• All your debts — balances, interest rates, and minimum payments.

• Your savings — how much you already have set aside for emergencies.

Seeing your numbers clearly helps you take control instead of letting money control you. If you’re not sure where to start, download our [Crush My Debt Tracker] to help you organize all your open debt in one place.

Step 2: Set SMART goals for debt and savings

Once you know your numbers, it’s time to turn your intentions into goals that stick.

Create separate milestone goals for paying off debt and building savings and make them SMART:

• Specific

• Measurable

• Achievable

• Relevant

• Time-bound

Example

• ❌ Not SMART: “Pay off debt and save money.”

• ✅ SMART: “Pay off $5,000 in high-interest debt by January 2027 and save $3,000 in a high-yield savings account by December 2026.”

Clarity creates accountability and accountability leads to progress!

Step 3: Build a small emergency fund (start with $1,000 – $2,000)

Even if you have high-interest debt, start saving a small emergency fund. Why? Because this money acts as your safety net. It prevents you from relying on credit cards when life happens.

Open a high-yield savings account and automate small deposits. Even $10 – $20 per week adds up over time. Progress > perfection and consistency builds confidence.

Remember: this isn’t just about numbers. It’s about giving yourself breathing room and peace of mind.

Step 4: Pay more than the minimum on high-interest debt

Once you’ve started saving, shift your focus to tackling any debt with interest rates above 7%.

Two proven approaches:

• Avalanche Method: Pay off the highest-interest debt first. This saves you the most money over time.

• Snowball Method: Pay off the smallest debt first for a quick win and momentum boost.

Pick whichever keeps you motivated. Both work if you stay consistent.

Quick note: The Your Money Style preferred debt-repayment method is the Avalanche Method because it is the most cost effective.

Step 5: As debt decreases, increase your savings

As you pay down debt, redirect the money you were using for debt payments toward savings. For example, if you were paying $300/month toward credit cards, move that $300 into your emergency fund once that balance is gone.

This “debt-to-savings” shift accelerates your progress and keeps your financial momentum strong.

Step 6: Build your full emergency fund (3–6 months of expenses)

When your high-interest debt is paid off, it’s time to level up your savings.

Calculate your necessary monthly expenses like rent, utilities, groceries, insurance, transportation. Multiply your necessary monthly expenses by 3–6 months to find your target emergency fund. For example, if your essentials cost $3,000/month, aim for $9,000–$18,000 saved in your high-yield account.

This is your ultimate peace-of-mind fund. Your financial safety blanket that lets you handle life without panic or debt.

Bonus Tip: Use a budget to map your money

Budgeting gets a bad reputation, but think of it as your money roadmap. It tells your dollars where to go so they don’t wander off.

A budget helps you:

• See your spending patterns

• Find room to pay debt faster

• Identify opportunities to save more

The upfront effort pays off and once it’s set up, maintaining it becomes second nature.

Download our free [Budget Builder Guide + Workbook] to start mapping your money today.

Step 7: Strengthen your money mindset

Here’s the truth: money management isn’t just math. It's the mindset.

It’s normal to feel overwhelmed at first. But every small step from automating your savings to making an extra debt payment is progress. You don’t have to be perfect, just consistent.

Focus on:

• Celebrating small wins — those add up faster than you think.

• Avoiding comparison — everyone’s money story looks different.

• Trusting your plan — even “slow” progress is still progress.

Your mindset determines how long you’ll stay the course. Stay patient and committed to your goals and they’ll compound over time.

The bottom line

You don’t have to pick between saving or paying off debt. You can (and should) do both. Start small. Create a clear plan. Build habits that support your lifestyle.

Remember, this journey isn’t about restriction. It’s about creating financial freedom that fits your life.

You’re building stability, confidence, and the ability to make choices on your terms.

Celebrate each milestone, because every decision you make today is shaping the future you want tomorrow.

Want to feel more confident with your money and actually enjoy the process? Your Money Style Newsletter for weekly tips, motivation, and tools to help you build a financial life that feels aligned, not restricted. ✨