If you’re like many Canadians, you’re not sure if you should prioritize paying down debt or saving for the future. On one hand, paying down debt frees up cash to handle life’s curve balls. On the other hand, investing early gives you the advantage of compound interest to grow your money.

Fortunately, it’s possible to balance both by creating a plan to stay on top of your finances.

Start with a budget

Ensuring you live within your means in the years before retirement will help you enjoy your golden years—and sleep better at night. A budget will:

• Help keep spending on track
• Distinguish the difference between needs and wants
• Help allocate money to repay debt
• Help allocate money for a nest egg
• Help create a contingency plan for unexpected expenses
• Reduce stress

Build an emergency fund

Once you have a handle on your expenses, put some money aside each month. This fund will help you deal with life’s surprises without sinking your retirement strategy.

Make a debt repayment plan

Figure out what you owe and what the interest rate is for each debt. Consider paying down your highest interest debt first, then paying down the next highest in turn, until you have paid off your debts. Remember that you will need to maintain minimum payments on all your debts while focusing on eliminating higher interest debts.

Create a retirement savings strategy

Now that you have a budget and debt repayment plan, decide how much you can invest for retirement. Talking to an expert will help you balance all relevant factors like age and income to create a retirement plan that’s right for you.