Pay Off Debt or Save First? | Guiding You Forward
Quick Summary
Do you know how to prioritize your saving? Credit cards, saving for retirement, emergency fund—which should come first?
In this episode of the Guiding You Forward podcast, we talk retirement planning with Stewart Campbell, director of wealth management at Mountain America Credit Union.
In this episode, you’ll learn:
- How to start planning for your retirement.
- Where your money should go first.
- How to create a budget for saving.
- How much you need in your emergency fund.
No matter where you are in the arc of your career, now is the time to begin planning for your retirement. Watch the video above to get started.
Build your emergency fund
We recommend saving at least six months’ worth of expenses. That may sound like a lot if you’re working with a limited budget. The key is consistency—contribute something each week, month or paycheck, building your account slowly. You'll soon see your accounts growing.
What if you have debt? Should you start saving or pay off debt first? Your number one priority, according to our guest, is to take advantage of any free retirement money that’s on the table. That means contributing at least enough to your 401(k) to max out your employer’s match (if they offer one).
Track your spending
Keeping track of all the money in and out of your account is an important step to saving. As you create a budget, be sure to include contributing to your savings so that every dollar has a job. Not only does this give you a better idea of how much you’re spending and what you’re spending it on, it also gives you a roadmap to build your savings.
One thing to remember is that your budget is flexible—as your life changes, revisit your allocations and update them as necessary.
Manage debt
Lastly, when it comes to debt, Stewart has a unique analogy—find out why he says that debt is like a sharp knife.
Watch this video from our Guiding You Forward podcast for more on saving and paying off debt.
