Millennials: Should You Focus on Saving or Paying Off Debt?

In the late 2010s, the millennial demographic became the most populous in North America. This cohort has huge potential but is also facing huge challenges. Many millennials have been saddled with student and other forms of debt.

Meanwhile, many members of this demographic are eager to invest or become homeowners. Should millennials focus on saving or paying down debt right now?

Millennials: Why you should save often and aggressively

Millennials should not panic if they have debt that is manageable. Interest rates dropped to historic lows following the 2007-2008 financial crisis. Millennials should not let their debt burden prevent them from saving early and often.

The last decade has been a huge boon for investors. Those who save today can move quickly to invest tomorrow. Servicing debt is important, but you should always seek to stash away at least 5-10% of your income per month. From there, you can explore investment options that are plentiful in this red-hot market.

Here’s how paying down debt can free you up in the long term

On the other hand, sometimes debt can balloon to unmanageable levels. If you are committing the bulk of your paycheque to servicing debt, this should become your top priority. Out-of-control debt can severely harm your credit and freeze you out of buying a house. Building a budget is one of the best ways to work your way out of debt.