How to manage debt

How to manage debt

Debt can feel overwhelming but taking control of it is possible. Managing debt is a step towards making smart choices that support long-term financial stability. Whether you’re dealing with credit cards, personal loans or a mortgage, understanding how to manage debt effectively will give you peace of mind and a clearer path forward.

Many people struggle with repayments due to a lack of a plan rather than a lack of funds. Without structure, it’s easy to fall into a cycle of making minimum payments while interest grows. This guide will walk you through practical advice on how to manage your debt, reduce what you owe and build a more secure financial future.

How to set a savings goal

Choose something to save for

Savings goals are personal, so think about your life and where you’d like to be. What would you like to be doing in a few months’ or several years’ time? Here are some examples of different goals you might focus on:

Short-term savings goals – smaller targets you could hit within a year or so, such as an emergency fund, holiday, furniture or a new electronic gadget

Mid-term savings goals – bigger goals that might take you a few years to save for, such as a new car, home improvements or a wedding

Long-term savings goals – high-cost or far-off things for which you might save for over five years or more, such as a home deposit, your child’s university fees or retirement

Whatever your situation, try to choose things that excite and motivate you to set a plan and stick to it.

Work out the numbers

The next step is to crunch the numbers. You can get out a pen and paper for this but there are lots of handy tools online and in apps to make your life easier.

1. Check how much you can save

Start by checking your monthly income and outgoings to see what you can spare. This will mean creating a budget , if you don’t already have one.

Many experts recommend aiming to save around 20% of your income each month. If your current lifestyle means you struggle to save much, you might need to consider adjustments to make your goals achievable, such as:

Reducing how much you spend in certain areas such as socialising, subscriptions or travel

Finding ways to increase your income, for example taking on extra work or selling some of your old possessions

2. Work out how much you need

You can’t work out how to save for something without knowing how much it costs, so next up is some research.

This bit’s easy if your goal has a clear number attached to it, like a new laptop or sofa costing £400. But if your target is longer-term and more variable, you’ll have to make an estimate instead.

Matthew Scrafton, National Account Manager at Evolution Money, suggests:

“You could look up data on averages if it’s relevant to your goal, such as house or flight prices. Alternatively, speak to friends and family who’ve saved for similar things to see if they can give you a rough number to aim for.”

3. Set a realistic timeframe

Next, work out how long you need to save for. Again, this could be easy if you have a specific date to aim for like a wedding or a loved one’s birthday. If your deadline is less certain, you’ve got more flexibility to think about how you want to save towards it.

Putting more aside each month will help you hit your goal quicker. At the same time, be realistic about the sacrifices you’d need to make along the way. If you can save a little slower and still be able to enjoy life, this might be the more sustainable option.

4. Find your monthly savings total

Now you can simply divide how much you want to save by the number of months available. This will tell you how much you need to save each month to hit your goal.

If this number’s very different to what you worked out you can realistically spare from your monthly budget, you’ll need to make tweaks until it works out.

Putting your money into a separate savings account can help it grow faster as you’ll earn interest on it. It may also deter you from dipping into your savings, which is often tempting. It’s best to shop around and compare factors such as:

1. Interest rates (a percentage you can earn on top of what you put in)
2. Rules around adding and withdrawing money
3. Customer service ratings of different providers

The right option for you will usually depend on what deals providers are offering at the time and how long you have to save. For example:

• For a short-term savings goal such as an emergency fund, an easy-access savings account will allow you to access your savings quickly without paying fees.
• For longer-term aims where you don’t need the money for a while, you could choose a limited-access account with higher interest but stricter rules around withdrawals.

Once you’ve chosen an account, check whether the provider lets you name it and assign a target amount and date. For example, you might call yours:

• MOT for the Beast
• Italy 2026!
• My first home

These features are often available via mobile banking apps and could help motivate you by making your goals feel more real.

Decide how you’ll pay into it

In most cases, setting up automatic payments is the best way to save for short-term goals and longer ones too.

You could set up what’s called a standing order for a specific amount each month, ideally just after payday. This way you’ll prioritise your savings rather than risk the temptation of spending them earlier in the month.

Some savings account providers offer other handy features to help you get closer to your dreams, such as round-ups. If you have a current (everyday) account with the same provider, this automatically rounds up each transaction and moves the difference into your savings. Every penny helps!

Stay consistent

Many savings goals last several months or years and sticking to them isn’t easy, especially when life gets in the way. Here are some final tips on how to save for something that really matters to you:

Track and celebrate progress

Seeing the progress you’re making could be a strong motivator, especially when you’ve been setting aside money for a while. That could mean simply checking your savings account regularly or using specific tracker apps, which often come with features like progress bars.

You may also be able to set up alerts for each deposit or specific milestones.

Create visual reminders

Visual reminders are great ways to bring your goals to life. That might mean placing quotes, photos or drawings in places you’ll see them often, such as:

• Your desk at work
• Your phone background
• Popular spots around your home like the fridge or bathroom mirror

Adjust your plan over time

Things change in life, so don’t feel afraid to adjust your savings plan as and when you need to.

Thinking positively, that could be that you’re earning more and can save more as a result. On the flipside, you may have some unexpected costs to deal with or even wider economic issues such as inflation, meaning you have to pause your saving or take it slower.

Either way, being adaptable will make it even more satisfying when you eventually do reach your goals.

How to manage debt effectively

Creating a structured repayment plan will stop your debts from feeling unmanageable. Start by working out how much you can realistically afford to repay each month. If your current income barely covers your essential outgoings, you may need to adjust your budget before setting firm repayment goals.

When deciding how to clear debts, consider two well-established approaches. The snowball method involves paying off the smallest balance first while maintaining minimum payments on everything else. Each cleared debt frees up more money for the next, creating a momentum that keeps you motivated. The avalanche method focuses on the most expensive debts first, tackling those with the highest interest rates to reduce long-term costs.

Whichever strategy you choose, consistency is key. Late or missed payments can lead to additional charges and damage your credit rating – making borrowing more expensive in the future. If you ever struggle to meet a payment, contact your lender as soon as possible. Many will offer temporary solutions, such as adjusted repayment plans, to help you stay on track.

How to manage debt and save

While paying off debt is important, having savings can help prevent the need for future borrowing. An emergency fund acts as a financial buffer, covering unexpected costs without relying on credit. Even setting aside a small amount each month can make a difference over time.

Automating savings can make the process effortless. Most banks and app-based current accounts offer round-up features that move spare change into a savings account each time you spend. Even without this option, setting up a direct debit for a modest amount will help you build reserves without thinking about it.

Adjusting your budget to balance debt repayment with saving is key. If clearing your debts quickly leaves you with no backup funds, a single unexpected expense could push you back into borrowing. Finding a sustainable approach ensures you stay in control without feeling stretched.

Speak to Evolution Money about managing debt

If you’re looking to simplify repayments, consolidating debts into one manageable loan could help you regain control. We offer secured loans designed to fit your financial circumstances – allowing you to borrow between £5,000 and £100,000 with terms ranging from three to 20 years.

The key to managing debt is finding a solution that works for you. If you’re interested in exploring your options, check your eligibility today. Browse our five-star ratings on feefo to see how we’ve helped people just like you and understand why we’ve been awarded the platform’s Platinum Trusted Service Award every year since 2021.

Our Help & Advice Hub is also available whenever you need practical guidance on personal finances.