In a perfect world, everyone would be debt-free with a fully funded emergency savings account. However, for many Americans, this is not the reality. If you find yourself in the common situation of having debt and little to no savings, it can be challenging to decide how to manage your finances effectively.
Money expert Jessica Moorhouse recently shared her advice on whether to prioritize paying off debt or building an emergency fund first. She emphasized the importance of having an emergency fund as the top financial priority, even if you have debt. Moorhouse believes that without cash reserves, unexpected expenses could derail your financial progress.
While some financial gurus advocate for aggressively repaying debt, Moorhouse stresses the significance of having cash on hand to prevent falling further into debt. She recommends focusing on building an emergency fund, starting with saving up at least three months’ worth of living expenses. During this process, it’s crucial to continue paying off debts, even if it’s just the minimum balance.
Ultimately, Moorhouse suggests finding a balance between paying off debt and saving for emergencies. Prioritizing an emergency fund can provide financial security and prevent future setbacks, allowing you to make progress towards a more stable financial future.
