Should I Save for My Future or Pay Off My Student Loans? What Should You Focus on: Getting Out of Debt or Saving for the Future? By Jordan Evans & Julie JaggernathWhen it comes to student loans, many people want to get rid of them as quickly as they can so that they can get on with the rest of their life. While they may not regret using student loans to finance their education, repaying them for years to come can be frustrating, especially when they can see so many other opportunities before them. Maybe they want to buy their first home, start saving for retirement, or start a business. When someone wants to pay down their student loan aggressively, but also looking forward to the future, the best approach is a balanced one \u2013\u00a0getting out of debt\u00a0but also setting money aside for later. If you\u2019re in this situation, don\u2019t give up in hopeless frustration that you can\u2019t have it all. Maybe you can\u2019t right now, but there are ways to achieve a good balance between the money you need right now and saving for what you\u2019ll need later. To help illustrate how you can have a bit of both right now, consider Darren\u2019s situation (we have changed his name to protect his privacy).Case StudySaving While Getting Out of Debt Darren used student loans to finance his education. Upon graduation, he was fortunate to land a great paying job. With the payments he\u2019s making on his student loan, he still has at least 7 years to go before it\u2019s all paid off. He could afford to repay the whole student loan in just under 4 years if he doubles his payments each month. However, that means he\u2019d have to put off saving for retirement for nearly 4 years. Starting retirement savings early means that he can take advantage of compound interest, but more importantly, he can earn an immediate return of 50% with his employer sponsored RRSP matching program. Darren\u2019s other concern is that if he doesn\u2019t choose ahead of time what to do with his money, he\u2019ll just blow it and have nothing to show for it later. What should he do?Smarter Ways to Do ThingsWhen You Can't Avoid Graduating With Debt Graduating with debt is worth avoiding because it limits future opportunities and delays your start with the rest of your life. But if you do graduate with a lot of student loan and education debt, the best advice is to pay debt down quickly because the interest rate to borrow money is higher than what you can earn in a savings account. However, there\u2019s more to it than meets the eye, and logical numbers aside, we need to outsmart our bad money habits at times. In Darren\u2019s case, there are advantages to taking a balanced approach, rather than paying all the debt off first and then starting to save. Not only will his employer contribute to his RRSP, the other thing to consider is how would he manage a financial emergency over the next 4 years if all of his extra money is used to pay off his loan? At some point, the unexpected will happen, so planning for the worst and hoping for the best is always better than scrambling to catch up when the unexpected does finally happen. After all the hard work it takes to pay down debt, no one wants to be forced to take out a loan or use a credit card to cover an emergency expense. Having some cash readily available is the one true trick for getting out of debt. It boils down to making well-planned choices with the money that\u2019s available. What would Darren\u2019s payments be if he paid his student loan off over 5 years instead of about 4? This would get him debt free 2 years sooner than if he continued with the payments he was making now. But, is that all he\u2019d gain? There's a lot to consider if you couldn't avoid graduation with debt. If doubling the monthly payment pays the student loan off in about 4 years, only topping it up by another half as much would extend the repayment time to a little over 5 years. This is longer than if he doubled his payment, but it\u2019s still less than the 7 years he has left now. By only topping up by half as much, there\u2019s money left over to start an RRSP. That\u2019s the huge benefit of a balanced - and smart - approach.Advantages of Employer Matching RRSP Contributions RRSPs reduce how much income tax you pay. The best way to contribute to an RRSP is to have the money come right off your pay cheque before you even see it. What you don\u2019t see, you don\u2019t spend, and when you pay yourself first, you know you won\u2019t end up short on cash. Looking at Darren\u2019s situation with the company\u2019s RRSP matching program, they add 50% to each RRSP contribution he makes. Nowhere else can he guarantee himself a return of 50%! The investment increases by half before it\u2019s even deposited in the bank. To gain an even bigger advantage, Darren could ask his employer to reduce the amount of tax they withhold when they deduct the RRSP amount \u201cat source,\u201d which means before he gets his pay cheque. By doing that, he would end up with a little more of each pay cheque in his bank account, rather than having to wait for the refund when he files his tax return the following year.A Balanced Approach is Often the Best Way to Get Out of Debt and Get Ahead The benefit to this balanced approach is that Darren gets out of debt with his student loan, because it\u2019s repaid in a reasonable amount of time, and he can start saving for retirement right away. For Darren, this is a win-win because he knows how much harder it will be to save later on when he owns a home and has a family. Student loan interest is also tax deductible so together with the income tax reduction from the RRSP contributions, there will be additional money with which to start an emergency savings fund. A balanced approach to\u00a0getting out of debt\u00a0is a great way to manage life\u2019s challenges, establish good money habits, build financial security through long term savings, and deal with your debt.