If you have high-interest debt, it’s essential to prioritize paying it off as soon as possible. However, while you’re focused on eliminating your debt, it’s crucial not to neglect building an emergency fund.

An emergency fund is a financial safety net that can provide you with a cushion during unexpected events such as medical emergencies, job loss, or car repairs. It’s typically recommended to save three to six months’ worth of living expenses in an emergency fund. This amount may seem daunting, but every little bit counts, and it’s important to start somewhere.

It’s understandable that you may feel like all your extra income should go towards paying off your high-interest debt. However, without an emergency fund, you may end up in a vicious cycle of accumulating additional debt whenever unexpected expenses arise.

One way to balance paying off debt and building an emergency fund is to allocate a certain percentage of your income towards each goal. For example, you could aim to put 70% of your extra income towards paying off debt and 30% towards building your emergency fund.

In conclusion, while paying off high-interest debt is crucial, it’s equally important to continue saving for an emergency fund. Doing so can provide peace of mind and prevent you from falling into additional debt when unexpected expenses occur.