7 Ways to Avoid Debt and Build a Strong Financial Foundation

avoid debt

As of 2022, debt per capita in the US has grown by almost 6%. The fastest rising is, by far, the credit card debt with 13.2% increase. Debt can be a heavy burden to carry, and we may be quick to get into. However, with some careful planning and smart financial choices, we can avoid dreadful situations. Here are seven techniques that can help you avoid debt and build a strong financial foundation for yourself.

Create and follow a budget

A budget is an essential tool for managing your finances. It helps you keep track of your income and expenses and allows you to make informed decisions about your spending. To create a budget, start by listing all of your monthly income and expenses. Be sure to include everything, from rent and utilities to groceries and entertainment. Then, compare your total expenses to your income and make adjustments as needed. By sticking to your budget, you can avoid overspending and stay on track financially. 

If you need more information on how to create a budget, we detailed a step-by-step guide.

Live below your means

Living below your means means spending less than you earn. It’s important to resist the urge to overspend, even if it means passing up on some luxuries. Instead, focus on the things that matter most to you and find ways to save money on everything else. For example, you can save money on groceries by buying generic brands or shopping for deals at discount stores. 

Save for emergencies

Unexpected expenses can pop up at any time, so it’s important to have an emergency fund to fall back on. Aim to save three to six months’ worth of living expenses in an emergency fund. This will give you peace of mind knowing that you have a financial cushion to help you weather any unexpected storms.

Avoid using credit cards

Credit cards can be a slippery slope to debt if you’re not careful. Try to pay for things with cash or a debit card whenever possible. If you do use credit cards, be sure to pay off the balance in full each month to avoid accruing interest charges.

Pay off debts quickly

If you do have debt, it’s important to pay it off as quickly as possible. Make more than the minimum payment each month to reduce the amount of interest you’ll have to pay. Consider prioritizing debts with the highest interest rates first. Indeed, they are the ones who will cost you the most over time.

Avoid unnecessary loans

Avoid taking out loans for things that aren’t essential. If you do need to take out a loan, make sure you understand the terms and interest rates before signing on the dotted line. Be sure to shop around for the best rates and terms. Generally speaking, a loan which doesn’t help you generate more money should be avoided. Exception made of course, if you have to face some type of emergency you can’t afford.

Educate yourself about personal finance

Finally, take the time to learn about personal finance so you can make informed decisions about your money. Read books, attend seminars, or take online courses to improve your financial literacy. The more you know about personal finance, the better equipped you’ll be to avoid debt and build a strong financial foundation.


In conclusion, avoiding debt requires discipline and smart financial choices. By creating and following these steps, you can avoid debt and build a strong financial foundation for yourself. With some careful planning and a bit of patience, you can achieve financial stability and peace of mind.

To take your personal finances a step further, you can register to the Finnt App and start using it for free. There, you’re able to save money and generate revenue from the first deposit onwards. You can also monitor your transactions and determine a more suited budget to develop better spending habits.