Should you save for retirement or pay off student loans?

Debt is not always bad: It can help you pay for a college education or buy a home, for example.

But figuring out how to balance student loan debt with a saving goal like retirement may be tricky: Nearly 34% of people under age 30 have student loan debt¹ and 30% of generation Z haven’t saved anything for retirement, even if they are working full time.

How do you balance your own drive to get rid of your student loan debt and save, even just a little, for your post-work years? Here’s how to start.

1. Set up a budget.

Basic, right? And yet almost 30% of adults don’t have one.² A budget really acts as a foundation for supporting lifelong financial security; it’s simply a way for you to understand if your income covers your expenses and what you have left for goals like retirement savings (and for student loan debt payoff, too). Your budget can be as simple or detailed as you like. (Not sure where to start? Our budget worksheet (PDF) can help.)

2. Use your debt-to-income ratio to really assess your finances.

A debt-to-income ratio is your total monthly debt divided by your gross monthly income. Why does it matter? A higher debt-to-income ratio negatively impacts your credit score, which in turn negatively impacts your ability to reach other long-term financial goals such as buying a house. In general, your ratio should be 28% or lower. If it’s higher, a quicker debt payoff schedule can help. Need help calculating your number? Use our debt-to-income ratio calculator below.

3. Build healthy savings habits.

Unless your student loan debt is very small, it may take time to get rid of it. Should you put off every other savings goal until that debt is gone? Probably not.

Take retirement, for example: the earlier you start saving for retirement, the better off you may be in your post-work years. “Most of us have competing timeframes and goals,” says Heather Winston, financial professional and product director for Retirement and Income Solutions at Principal®. “It’s unrealistic to think you can stop saving for retirement just to make your debt go away faster.”

Here’s one way to think about it: Focus less on how much you save, and more on the habit of saving itself. Start small—even $10 a month—but just start. If you’re able to save more, take advantage of benefits like putting enough into an employer-sponsored retirement plan to get the maximum match.

4. Adapt, then adapt again, to pay off student loans and save for retirement.

Some years, you may receive raises that let you save more for retirement or pay off more student loan debt. Some years, you may have unexpected expenses that prompt a reassessment of your budget. That’s OK. There will always be people who are doing more or earning more. When it comes to debt and financial goals, you can only control your choices.

Some, like Winston, take one path. “I lived off ramen noodle soup and peanut butter-and-jelly sandwiches for nearly a year so I could pay off what I owed coming out of college,” Winston says.

You can choose what works for you—ramen or not. For example, match what you spend going out to dinner with an extra payment toward your student loan. Or downsize your apartment, even for a year. “Recognize that your experience is not like that of the people around you,” Winston says. “It’s yours and what you make of it is all under your control.”