7.1.8 Saving, investing and debt

If you're not spending all your money, you're saving. That's a good start. In fact, experts recommend saving 10 percent of your take-home pay if you can. If you can save 15 percent, you'll quickly get much further ahead. If you can't save that much, set a realistic target and work to reach it.

But it's what you do with the money you save that takes careful thought. You could invest your savings. Before you invest, though, consider if you should pay off any outstanding debts first. That's because the interest you pay on debts will likely be more than you can earn with common investments.

In most cases, you will be better off if you pay down your high cost debts first, then use your money for investing. But it does depend on various factors, such as the interest rate, the rate of return and the tax rate.

To see how much an investment must make before it has the same value as paying down a debt, try this calculator.