Lisa Lokasto

One of the most common personal finance dilemmas is whether to pay down debt or save for a rainy day first. It’s a tricky question and most people probably think they should park saving and work on getting their debt down first. My personal opinion, I’d say start with the rainy day fund.

Why the Rainy Day Fund Comes First

The lack of a financial cushion is what leads people into debt in the first place. Think about it. If an unexpected car bill, or vet bill comes up you’ll be straight to the credit card if you have nothing set aside. That cycle repeats. Not having a cushion is how you got into debt.

A rainy day fund is your small, short-term safety net with enough to cover things like a flat tire, a vet visit, or a surprise bill. For most people, that looks like €500 to €1,500 in an easily accessible savings account.

Without it, you’re always one hiccup away from more debt.

Next Priority: High-Interest Debt (Like Credit Cards)

Once your rainy day fund is in place, shift your focus to the debt that’s bleeding you dry thatly be high interest credit cards (it might also be clothes catalogs). These are the most toxic kind of debt because the interest compounds so quickly.

If you’re only making minimum payments on credit cards, you’re likely spending hundreds or even thousands on interest over time. Keep the rainy day fund in place while you tackle this aggressively.

After That: Everything Else

Once the immediate danger of high-interest debt is under control and your rainy day fund is holding, you can move on to:

• Building a full emergency fund (3–6 months of expenses)
• Paying off lower-interest debt like car loans, or a mortgage
• Investing for the future

Bottom Line

Building a rainy day fund is about breaking the cycle that caused the debt in the first place. Without that buffer, life’s next surprise could set you back to square one.

This isn’t professional advice, it’s honest, human advice based on real life experience. Just because I’m an accountant, I haven’t been immune to financial struggles myself. Like many people, I’ve had to face hard moments and adjust my money mindset along the way.

Lisa