A few years ago, I felt stuck in a cycle—every paycheck went straight to debt or bills, leaving nothing to save.
It was frustrating. No matter how hard I tried, it felt like I’d never get ahead. And the thought of an emergency? Terrifying.
If you’ve ever felt this way, you’re not alone. Many people think they have to choose between paying off debt or saving money. But the truth? You can do both.
It just takes a smart approach.
In this article, I’ll walk you through five simple ways to tackle debt while growing your savings. These strategies are practical, doable, and they work.
1. Prioritize High-Interest Debt While Saving Small
High-interest debt drains your finances fast. The longer it sits, the more it costs you.
The best approach? Focus on paying off high-interest debt first while setting aside a small amount for savings.
The debt avalanche method is a great way to do this. It prioritizes debts with the highest interest rates first, saving you the most money in the long run.
Here’s how it works:
- List all your debts from highest to lowest interest rate.
- Pay the minimum on all but the highest-interest debt.
- Put any extra cash toward that top debt until it’s gone.
- Move to the next highest-interest debt and repeat.
But what about saving? Even while aggressively tackling debt, setting aside a little money for emergencies is crucial.
Try saving just $25 to $50 a month in a separate account. It won’t slow down your debt payoff much, but it’ll give you a cushion for unexpected expenses.
Without it, one emergency could force you to rely on credit cards again—undoing all your progress.
By balancing both, you keep your finances moving forward without setbacks.
2. Use the 50/30/20 Budget Rule for a Balanced Approach
Budgeting makes it easier to pay off debt and save without feeling stretched too thin.
One of the best methods? The 50/30/20 rule. It helps you split your income into three simple categories:
- 50% for needs (rent, food, bills, minimum debt payments)
- 30% for wants (entertainment, dining out, non-essentials)
- 20% for financial goals (debt payoff and savings)
If you’re deep in debt, you can tweak it. For example, shifting some of that 30% toward extra debt payments or savings.
Say you bring home $3,500 a month:
- $1,750 covers needs
- $700 goes to wants
- $1,050 is split between debt and savings
This method ensures you’re paying off debt, saving, and still enjoying life—without guilt.
Tracking your spending is key. Even small changes, like cutting one or two expenses, can free up more for your goals.
The goal isn’t perfection—it’s consistency.
3. Build an Emergency Fund to Avoid More Debt
Debt is stressful enough—an unexpected expense makes it worse.
Without savings, a car repair or medical bill could force you to use credit, putting you further behind. That’s why an emergency fund is essential, even when paying off debt.
You don’t need a huge amount. Start with a $500 to $1,000 goal—enough to cover small surprises.
Here’s how to build it without slowing debt payoff:
- Set up automatic transfers—even $10 a week adds up.
- Use extra cash—tax refunds, bonuses, or side hustle income.
- Cut a small expense—one less takeout meal could mean $50 saved.
Keeping this money separate from your main account helps you avoid dipping into it for everyday spending.
Once you hit your starter goal, shift focus to debt while gradually growing your savings.
A small cushion prevents setbacks—keeping you on track.
4. Take Advantage of Employer Benefits and Free Money
If your job offers financial perks, use them—they can help you save without extra effort.
The best example? 401(k) matching. If your employer matches contributions, that’s free money toward your future. Even if you’re paying off debt, try to contribute at least enough to get the full match.
Let’s say your company offers a 100% match on 3% of your salary:
- If you earn $50,000, contributing $1,500 a year means your employer adds another $1,500—doubling your savings.
Other perks to look for:
- Health Savings Accounts (HSA)—Tax-free savings for medical expenses.
- Employee stock programs—Discounted investments for long-term growth.
- Tuition assistance—Free money for education to boost your income.
Skipping these benefits means leaving money on the table.
Even while paying off debt, grabbing free financial boosts puts you ahead.
5. Find Extra Income Streams to Boost Both Savings and Debt Payoff
When money feels tight, earning more can speed things up. Even a small extra income can help you tackle debt and grow savings at the same time.
Side hustles don’t have to take over your life. A few flexible options:
- Freelancing—Writing, graphic design, or virtual assistant work.
- Selling unused items—Declutter and make quick cash.
- Gig work—Food delivery, pet sitting, or online tutoring.
Even $200 a month can go a long way—half toward debt, half into savings.
Other easy ways to boost cash flow:
- Cashback apps—Earn rewards on everyday purchases.
- Bank bonuses—Some banks offer free money for opening an account.
- Rent out unused space—A spare room, storage, or parking spot.
The key is choosing something manageable. You don’t need a second full-time job—just a little extra to stay ahead financially.
Conclusion
Balancing debt repayment with savings isn’t easy, but it’s possible with the right approach.
By focusing on high-interest debt first, using a budget that works, and setting up a small emergency fund, you protect yourself from setbacks.
Taking advantage of free money from employers and finding extra income can give your finances an extra boost—without overwhelming you.
The key? Progress over perfection. Even small steps make a difference.
Start with one strategy today, and over time, you’ll see real financial growth.