By Kelly Lynn Adams

Q: It seems like now would be a good time to start investing, but how do I know if I should be investing or saving right now?

A: This is a very common question, especially if you have student loans, credit card debit, a mortgage, no emergency fund and/or are barely being able to pay your bills. And, unfortunately, the answer isn’t quite so simple but rather depends on many factors such as how much debt you have, the interest rates on your debt, your risk tolerance and your attitude towards money, investing and debt. Without knowing too many details, there are a 2 things you should do before you start to invest:

Pay off credit card debt and car loans. Grab a pen and paper and start listing your credit card debt, ordered from the highest interest rates to the lowest interest rates. Don’t get overwhelmed! Over 50% of people don’t want to face their debt, but knowledge is power and if you start to list your debts you can then put a plan in place to start paying them off and taking control over your debt because you’ll want to pay off your credit card debt and car loans before you start investing.

Should you cancel your credit card?

Establish an emergency fund. If you don’t have an emergency fund, you will want to start one before you invest. You should work up to an emergency fund that has 6 months worth of expenses saved. Again, don’t get overwhelmed – this will take time – but it is important for you to have this in place before you start investing to protect you in the event of an emergency. You don’t have to have all 6 months saved before you start to invest, but start an emergency fund and contribute to it on a regular basis.

How to save more money now!

Once you have taken action steps towards paying off you debt and establishing an emergency fund, you can start investing while still paying down your student loans and mortgage, if you have either. The younger you are, the riskier you can be in your investments (for example, you may consider investing in the stock market). If you are older, though, you should be investing in more stable investments (such as bonds and secure, growing mutual funds). And, as always, choose a diversified investment strategy, talk with a trusted expert and only do what you’re comfortable with.

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