When it comes to managing finances, it really does seem like you can’t have your cake and eat it too. Why? Because in these modern times, it’s tricky to save and pay off debt at the same time. It’s as if we have to pick one: either we pay off that loan faster or add some funds to the savings account.

But many of you want to do both. After all, financial experts tell you to do both, and all your loved ones expect you to do both. How can you make it happen?

They’re Not Contradictory if Done Correctly

It goes without saying that you can save the most money when you have more of it to save. With debt, especially high debt, a significant portion of your cash flow goes towards paying off the debt.

But saving and paying aren’t mutually exclusive: it all boils down to having a strategy. Much of it revolves around your budget. A well-structured budget can help debt repayment and save money simultaneously, even if that means reaching your goals later on. But sometimes even with a good budget, people find it hard to do both.

Tricks to Both Cut & Save

Pay minimum down on your debt while your savings buildup

It’s true – paying just the minimum for your debt will prolong the payment period. However, for a short time, you can pay just the minimum to free up some cash which can go towards your savings.

You should consider making an emergency fund a priority, because it serves as a cushion for your finances. No one is a stranger to unexpected costs, such as a car or home repair. Since these unplanned costs can quickly push you further into debt, it’s vital to have an emergency fund to cover you.

It’s also suggested that you work next on contributing more towards your 401K, even if it’s likely to be a small contribution at this point.

Overall, this is not the best long-term strategy, but it does give you an opportunity to slowly get out of the red while saving for a rainy day.

Finding Your Balance

The ideal long-term strategy allows you to contribute the most amount possible to paying off debt while bulking up your savings.

At this stage of the game, you will have built up some savings while still making progress reducing your debt. You could decide to increase the payments you make towards your liabilities to pay off your debts faster. Or, you can decide to focus more on your savings.

It’s all about what’s more beneficial in the long run. For example, If there’s more opportunity with your savings/investments, then focusing on those instead of debt makes more sense. Later down the road, you may be in a position to pay off larger sums of debt.

Working closely with a financial advisor will help you make the best choice when deciding how to allocate your funds.

Keep in mind that getting here takes time. So if you’re in an emergency situation where you have heavy debt and little savings, don’t expect to achieve the perfect balance yet. Although you can do both, you can’t achieve a perfect balance right away.

Saving Money or Debt Repayment? No Conflict At All

To sum everything up, the goal to save money while focusing on debt repayment isn’t a catch-22. It will only feel that way if you set your expectations too high. You’ll feel the crunch if you try to save and pay off debt amounts that just aren’t possible with your budget and earnings.

But using the strategies mentioned in this post will eliminate that perfectionist thinking. They will help you to focus on what’s more urgent until you’re able to make a more balanced contribution to both. In time, saving money and paying off debt will no longer seem impossible.