5 Tips for Adjusting Your Budget When You’re Facing a Crisis

A family color at home.
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Getting through a tough time often requires making sacrifices — including financial ones.

A serious illness, the death of a family member, unexpected emergencies and job loss create precarious situations that force people to change their regular spending habits. The pandemic has presented particular challenges to so many people.

You might feel helpless in the midst of a crisis, but there are actionable steps you can take to shift to a bare bones budget and stretch your dollars.

5 Tips for Creating a Bare Bones Budget During a Crisis

1. Cut Out the Nonessentials

Paring down your budget means making difficult choices. What you need to cut may not be obvious.

You may be so used to coloring your hair that it seems like an essential cost. Or perhaps your kid has been involved in a soccer league for three years and you couldn’t imagine pulling him out for a season.

But you have to ask yourself: Is this expense important for my survival? Could I get by without it?

A true bare bones budget only includes necessities — things like food, shelter, electricity, water and medical expenses. It should also factor in financial obligations, because defaulting on a student loan or tax bill, for example, could result in garnished wages.

The extent of your financial situation will determine how strict you have to be about your budget cuts. Robust savings or passive income streams may allow you to reduce your spending while keeping a few luxuries.

2. Pause Service Contracts and Subscriptions

Slashing costs from your budget may seem more trouble than it’s worth if you’re locked in a contract with a hefty cancellation fee. Fortunately, you don’t have to permanently cut some expenses.

You may be able to pause, say, your cable and internet service for a certain amount of time rather than canceling. You can restart service later when your financial situation is back on track.

Even if you aren’t stuck in a contract, you might have this option. If you’re billed monthly for any type of subscription service, ask your provider if you can temporarily pause payments.

3. Halt Extra Debt Payments

Funneling extra money towards debt — whether you’re taking the snowball or avalanche approach — is usually a smart money move. But when you’re in a place of financial uncertainty and you need your money to stretch, consider putting your debt repayment plan on hiatus.

Continue to make minimum payments as they come due, but refrain from paying extra for the time being. Consider this a temporary money-saving measure, and go back to making those extra payments when your situation is more stable.

4. Reduce Spending on the Necessities

Just because an expense is necessary doesn’t mean you can’t find ways to pay less.

Save money on groceries by using coupons, eliminating convenience foods and buying store-brand products over name brand.

Cut utility costs by reducing usage. Lower transportation expenses by saving on gas. Try a prescription discount card to find cheaper prices for your medications.

Take a magnifying glass to all your essential expenses, and brainstorm how you can shave down your spending.

5. Ask Creditors, Financial Institutions and Others for Help

Several U.S. banks have responded to the coronavirus pandemic by offering financial assistance. Some have waived or lowered fees. Others sent out statements asking customers to contact them for help on a case-by-case basis.

When you’re in the midst of a crisis that’s preventing you from making bill payments or putting you in danger of overdrafting on your account, contact your lenders, financial institutions, landlord and service providers to see if they offer any hardship assistance.

That could look like a credit limit increase, adjusting your payment schedule, waived fees or more.

The United Way’s 211 helpline is a great place to turn if you need help with essential needs, such as housing or food. In the wake of the coronavirus outbreak, 211 is helping individuals across the country who are suffering from lost wages due to business closures, event cancellations and quarantines.

Feeling overwhelmed? Create a budget that works for you with our budgeting bootcamp!

Nicole Dow is a senior writer at The Penny Hoarder.