Now, with the above guidelines, it’s important to note that you can do a little bit of both.
You can invest a bit, while also saving, especially if you have no high-interest debt.
Over the last several years, I’ve done both. I’ve paid off debt, invested in my 401(k) and saved for an emergency fund.
Whichever your biggest priority is, whether saving cash for college or paying down debt, this will inform where you dedicate the most resources.
In the past, paying down debt was my highest priority so I’d dedicated $2k a month to debt, $800 to my 401(k) and a couple hundred to my emergency fund. This allocation has changed as my priorities have changed.
Now, I’m focused on saving for a down payment on a rental property so I’m working on stacking cash in my high-interest savings account, while also maxing out my 401(k) and putting the minimum on my student loans each month.
Like I always say, personal finance is personal. Run some numbers to help inform your priorities, and save, invest, and pay down debt accordingly.
Saving Vs. Investing: What are you doing?
Tell me what your preference is and why down in the comments below!