March 1, 2024
[rt_reading_time] min read

Today, we’re delving into a common dilemma faced by many individuals: whether to prioritise saving or paying off debts. It’s a question that can have a significant impact on your financial wellbeing, and the answer isn’t always straightforward. Join us as we explore the factors to consider when making this decision.

Understanding Your Financial Situation

Before we dive into the debate of saving versus paying off debts, it’s crucial to assess your current financial situation. Take stock of your income, expenses, assets, and liabilities. Understanding where you currently stand will provide clarity as you make decisions regarding saving and debt repayment.

The Case for Saving

Before paying off debts it can make sense to establish a sufficient emergency fund. This will provide you a safety net in case of unexpected expenses or loss of income, and can avoid you having to build up more debt. We often recommend having three to six months’ worth of living expenses saved in an easily accessible account.

The Importance of Debt Repayment

Debt can be a significant obstacle to financial freedom. High-interest debt, such as credit card debt or payday loans, can quickly spiral out of control if left unchecked. Prioritising debt repayment can save you money in the long run by reducing the amount of interest you’ll pay over time. Plus, eliminating debt can improve your credit score, free up more money to put toward your savings goals, and provide you with peace of mind.

Should I Save or Pay Off Debts?

So, should you save or pay off debts? The answer depends on your individual circumstances. Here are some factors to consider:

Interest Rates: Compare the interest rates on your debts to the potential returns on your savings. If your debts have high-interest rates, focusing on debt repayment may yield greater financial benefits in the long term.

Emergency Fund: If you don’t already have an emergency fund, prioritise saving until you have enough set aside to cover at least three months’ worth of living expenses. Once you have a safety net in place, you can shift your focus to debt repayment.

Psychological Factors: Some people find peace of mind in paying off debts, even if it means temporarily delaying savings goals. Others prefer to have a financial cushion in the form of savings before aggressively tackling debt. Consider what approach aligns best with your values and priorities.


In the debate between saving and paying off debts, there’s no one-size-fits-all answer. It’s essential to evaluate your financial situation, consider your goals, and weigh the pros and cons of each approach. Whether you choose to focus on building savings, tackling debt, or striking a balance between the two, the most important thing is to take proactive steps toward financial stability and security. Remember, small changes today can lead to significant rewards tomorrow.

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