[ITEM 3] QUESTION: How to budget if you have debts and want to save money?

Combining the process of paying off debts and building savings often causes serious difficulties for those who are just starting to manage their finances. First of all, it is necessary to direct main efforts toward eliminating debts with the highest interest rate, as they cause the most damage to your budget. However, before starting an active onslaught on expensive loans, be sure to build a small preliminary reserve equal to at least one month of your mandatory expenses.

Having even a minimal emergency fund is critically important so that in the event of unforeseen minor troubles, you do not have to resort to taking out new loans or credit cards again. As soon as this basic insurance fund is created, you can move on to a balanced distribution of available funds between two parallel areas. Direct some of the money toward early loan repayment, and regularly set aside the other part to achieve your priority life goals.

To maintain motivation and order in your finances, it is useful to use automatic transfers immediately after receiving your salary. Set up a rule in your mobile banking app where a fixed amount goes to replenish a savings account, and a second fixed amount goes toward reducing the principal debt. This systematic approach allows you to gradually get rid of financial ballast in the form of loans and simultaneously build capital for future major purchases.