Building Savings or Paying off Debt: Which Should You Prioritize?

Building up savings and paying down high-interest consumer debt are both critical financial cornerstones, but which one you should you put first?

There are many endless debates that have resonated throughout all of human history. Ketchup versus mustard. Fries versus onion rings. Dogs versus cats. Scots versus Scots versus other Simpsons references.

But perhaps no debate has baffled humanity quite like the one between savings and debt. If you’ve got enough income to contribute a healthy amount to building up both your savings and your debt, then bully for you—but unfortunately, most people will have to make some hard choices.

And given that building your savings and paying off your debt are both crucial financial cornerstones, it can be tough to know which you should consider more important.

There’s not necessarily one answer that will fit everyone’s situation. That’s why we spoke to the experts to find out what you should consider when considering your financial priorities.

The case for building your savings:

While paying off your debt is undoubtedly important, if you don’t have any savings, you’ll be at risk for any number of unseen events that leave you relying on high-interest no credit check loans like payday loans and cash advances to make ends meet—driving you further into debt.

“Whether paying off debt or prioritizing savings is a better idea depends on your particular situation,” Associate Financial Planner Anna Keisler explained.

“Let’s start with your current situation. If you have extra cash to either save or put towards debt, look at your current savings amount. While it may be appealing to put all of your extra income towards your debt, it may not be the best idea.

If you don’t have three to six months worth of expenses saved up in an emergency fund, you should focus on building up the emergency fund and just paying minimum debt payments until you have an adequate reserve set aside.

“Remember, life happens whether you’re ready or not. It doesn’t help to spend $2,000 paying down debt, only to have a $2,000 car repair that you have to take out debt to pay for.”

The case for paying off your debt:

As Keisler said, what you should prioritize will always depend on your situation. Which is what all of our experts generally agreed on. Though just as Keisler leaned towards savings, others leaned a bit more towards paying down your debt.

“When choosing between building up savings or paying off debt, my advice is to pay off any existing debt as quickly as possible,” suggested Deborah Sweeney, CEO of

“From credit cards to student loans, pay off the debt that has the highest interest rate first and then work your way through debt with lower interest rates. Doing this improves your credit score and makes you a more attractive candidate for other financial opportunities later on.”

The debt repayment method that Sweeney’s referring to is called the Debt Avalanche. Check out this post to learn more.

Josh Hastings, the founder of Money Life Wax, got into some of the different types of debt and how that should impact your priorities:

“High-interest consumer debt and student loans should be priorities before investing. Improving your debt to income ratio is important and freeing up your cash flow by paying off your debt allows you to throw more into investing down the road.

“By focusing on debt payoff you also develop good financial behavior habits that teach you to focus on priorities instead of variable spending. Once those good financial habits are established and the debt is paid off you will be more committed to investing/saving.”

And he wasn’t the only one to explain how different kinds of debt might require different levels of urgency.

“Prioritize paying off debt before building up savings,” recommended Katie Ross, Education and Development Manager at American Consumer Credit Counseling. “The longer you hold your debt, the more you will pay in interest in the long run.

“Focusing on paying off your debt allows you to reduce the amount paid to debtors, thus enabling you to more effectively save in the long run.

“However, prioritizing debts like mortgage payments are an exception. Mortgages are installment loans, and while paying extra can help you repay your loan faster, as long as you can make your monthly payments, growing your savings may take the priority to paying extra.”

The case for … both:

Of course, the best thing you can do, if it’s financially feasible, is finding a balance between paying down your debt and building up your savings.

“While it’s important to pay off debt, you also want to ensure that you have savings for the future, emergencies, and to avoid going into more debt into the future,” urged Ross.

“Create a budget and make a debt repayment plan. Decide how much you are going to pay towards each debt every month. Then, based on how much money you have left over, choose a percentage to put towards savings each week or month.”

At the end of the day, whether you prioritize savings or debt will depend on your specific situation, as all of our experts made clear. You’ll need healthy savings and as little consumer debt as possible to keep your finances on steady ground and keep bad credit loans like payday or title loans away from you.

Want to learn more about saving money and getting out of debt? Check out these other posts and articles from OppLoans:

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Josh Hastings is a former High School Athletic Director at the secondary level who shifted his focus in 2016 to focus more effort on his entrepreneur endeavors. In 2017 he founded Money Life Wax (@moneylifewax), a personal finance site dedicated to helping millennials with student loans. With an emphasis on money and finance behavior, Josh started Money Life Wax to help millennials realize there are other ways to make money and be happy in the 21st century.
Anna Keisler is a Financial Planning Associate with SG Financial Advisors in the Atlanta, GA area.  When not assisting with financial planning, you can find her at the gym or trying new restaurants. She currently resides in the metro Atlanta area with her husband and two cats.
Katie Ross joined the American Consumer Credit Counseling management team in 2002 and is currently responsible for organizing and implementing high-performance development initiatives designed to increase consumer financial awareness. Ms. Ross’s main focus is to conceptualize the creative strategic programming for ACCC’s client base and national base to ensure a maximum level of educational programs that support and cultivate ACCC’s organization.
Deborah Sweeney (@deborahsweeney) is the CEO of (@mycorporation). MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best.

The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through the OppLoans blog.