We’re usually told that paying down debt is an important part of getting our finances on track – but one financial coach says the current economic environment might make it less of a good idea.

Financial coach Shula Newland said more people were struggling because of the rising cost of food, and higher interest rates.

She said people who wanted to achieve financial control would need to have some money set aside in savings – even if that came at the expense of paying down debt.

“Where we are at the moment is a pretty rocky economy. We want people to reduce spending and accumulate more cash. Paying down debt is something you need to weigh up – unless it’s a credit card you can pay down and then draw back, or revolving credit, if it’s normal debt you can’t get that money back if you need it.”

She said people should budget a sustainable amount of money for debt repayment so they did not run short – or get stuck in a cycle of needing to draw it all back again each time.

“The traditional advice was to pay down debt like credit cards to reduce interest payments, but most people that are relying on credit cards are not able to pay down debt. This means they try to increase payments but go around in circles. They don’t have any savings and need to keep redrawing on the cards,” Newland said.

Instead, she recommended a sustainable plan.

“Budget for the minimum payment for the credit card and set up an automatic payment for that, then I say ‘forget about it’. If you set up an automatic payment and forget about your credit card, it will come down faster because I would set the payment at a level that would ensure that if it was maxed that the minimum would get paid.

“As it comes down, you’re getting that same automatic payment going on there.”

At the same time, people could start to set up a savings account.

“In this economy, you really need to build up a bit of a back-up in case you lose your job.”

She said people who owned a house would also need a buffer in case of unforeseen house expenses.

“In general, good financial planning is making sure you’ve always got access to liquid funds. Certain money personalities have difficulty with that because they a) spend it or b) have a higher risk appetite and don’t want to see savings sitting there when they could be invested.”

The riskier someone’s situation, the more money they should keep aside, she said. Owning a business was riskier, she said, as was having multiple properties.

She said it could be a sensible idea to get a second job to earn more money that could then be saved.

“If your relationships and mental health can wear it, get a second job and save the money you make.”