Introduction
Trying to escape debt while growing your savings can feel like fighting a battle on two fronts. But here’s the truth: it’s not only possible—it’s one of the smartest financial strategies you can adopt. In this guide, we’ll walk you through how to get out of debt and save money at the same time, without sacrificing your financial stability or peace of mind.
1. Build a Budget That Works
To successfully learn how to get out of debt and save money, you must first understand where every pound goes. Create a zero-based budget that allocates every bit of your income to a category: essentials, debt payments, and savings. Track spending and identify opportunities to cut back.
2. Prioritise and Split Surplus Funds
After covering bills and minimum debt payments, divide any remaining income between savings and additional debt reduction. This ensures progress on both fronts. It’s okay to start small—consistency is more important than the amount.
💡 Tip: Use the 50/30/20 rule as a guide—50% needs, 30% wants, 20% savings and debt payments.
3. Cut Spending Without Sacrificing Quality of Life
To get out of debt and save money, you don’t have to live miserably. Focus on strategic cutbacks:
- Cook meals at home
- Cancel unused subscriptions
- Use public transport or carpool
- Buy second-hand when possible
These small lifestyle shifts can free up hundreds per month to apply toward debt or savings.
4. Use Tools to Lower Debt Costs
Lower your interest payments and reduce financial stress by using:
- Balance transfer credit cards (0% APR)
- Debt consolidation loans
- Refinancing options
Lower interest means more money goes to the principal—and potentially into savings.
5. Automate Savings and Debt Payments
Automation is your best friend. Automatically transfer money to your savings account and set up scheduled debt payments. This keeps your finances on track and helps you avoid missed payments or the temptation to spend.
📈 Even £25/month in savings adds up to £300 in a year—while also building great habits.
6. Build an Emergency Fund—Yes, Even Now
Many wonder whether they should save before paying off debt. The answer is: do both. A small emergency fund (£500–£1,000) prevents you from taking on more debt when life throws curveballs.
This step is key in any strategy on how to get out of debt and save money sustainably.
7. Increase Your Income
Making extra money is a powerful way to accelerate both goals. Consider:
- Freelance work (writing, design, tutoring)
- Selling unused items online
- Gig economy jobs (Uber, Deliveroo, Fiverr)
- Asking for a raise or upskilling for a higher-paying job
More income = faster debt payoff and faster savings growth.
8. Take Advantage of Cashback & Savings Apps
Apps like Plum, Cleo, or Moneybox help you round up purchases and save passively. Combine that with cashback sites or rewards credit cards (used responsibly), and you’ll add value to everyday spending.
9. Track Your Progress Visually
Motivation matters. Use a spreadsheet, mobile app, or even a paper tracker to monitor:
- Total debt paid down
- Savings balance over time
- Milestones reached (e.g., first £100 saved, first card paid off)
This reinforces your efforts and helps you stay consistent.
10. Seek Support When Needed
Whether from a financial advisor, support forums, or a nonprofit credit counselling service, don’t be afraid to ask for help. Expert guidance can make your path smoother and faster.
🔍 Look into free tools and advice from organisations like StepChange or National Debtline.
Quick Recap: How to Get Out of Debt and Save Money
| Step | Impact |
|---|---|
| Build a budget | Gives you clarity and control |
| Cut unnecessary expenses | Frees up money to apply elsewhere |
| Automate and split funds | Creates balance between saving and repayment |
| Use smarter debt tools | Minimises interest and simplifies payments |
| Increase income | Speeds up both debt repayment and savings |
| Start emergency saving | Prevents new debt from unexpected costs |
| Use apps and cashback | Makes saving effortless |
| Track progress | Keeps you motivated and on track |
Conclusion
Knowing how to get out of debt and save money isn’t about choosing one goal over the other—it’s about balance. By budgeting smart, trimming expenses, boosting income, and automating your money, you can eliminate debt and grow your savings at the same time.
✅ Remember:
You don’t have to wait to be debt-free to start saving.
Start small but stay consistent.
Celebrate progress—even the little wins.
