How To Cut Back On Spending During A Financial Crisis

When a financial crisis hits, whether from job loss, reduced work hours, rising costs, or unexpected emergencies, it can feel like the ground has shifted under your feet. 

Bills keep coming, prices keep rising, and your income may not be enough to cover it all.

In moments like these, every dollar matters. While you cannot always control what is happening around you, you can control how you respond. 

Making smart, deliberate cuts to your spending can help you survive the short term and set yourself up for recovery in the long term.

Below, you’ll discover:

• How to quickly assess your financial situation
• Which expenses to eliminate first
• Strategies to lower the cost of basic living essentials, without sacrificing your health or safety
• Ways to stretch your money and boost income during tough times
• How to prepare for any future financial crisis that may occur
  

Step 1: Get A Clear Picture Of Your Finances

Before you start cutting your expenses, you need to know exactly where your money is going. 

To get an accurate picture, review your last 30 to 60 days of bank statements, credit card bills, and receipts. Highlight every expense and sort it into two main categories:

Essential: Rent or mortgage, utilities, groceries, transportation and/or vehicle loan payments, insurance, medications, childcare, student loans, etc.

Non-essential: Dining out, entertainment, subscriptions, clothing beyond basics, impulse purchases.

For many people, simply seeing where their money goes is eye-opening. 

You might realize you are paying for services you forgot about or spending more in certain areas than you thought. This awareness is the foundation for making effective cuts to your monthly spending.

Step 2: Protect Your Essentials First

When money is tight, the most important thing is keeping your home and family secure. 

Think of this step as protecting the foundation of your home. Without it, everything else can crumble.

Your priorities should be:

• Housing: Rent or mortgage comes first. Keeping a roof over your head protects your family from eviction or foreclosure.
• Utilities: Electricity, water, gas, and even internet. Especially if you or your kids depend on it for work or school.
• Food: Nutritious, affordable meals that keep everyone fueled and healthy during stressful times.
• Transportation: Gas, public transit fare, or basic car maintenance so you can get to work, school, or essential appointments.
• Health: Doctor visits, insurance payments, and prescription medications that safeguard your well-being.
• Loans And Credit Card Payments: You should ensure you pay any personal loans, student loans, and credit card payments you owe each month
  

If covering even these basics feels overwhelming, don’t wait until you’ve missed payments. Call your landlord, lender, or utility company right away. Many have hardship programs that can reduce or pause your payments. 

Reaching out early is a way to buy yourself breathing room and protect your family’s stability.

Step 3: Cut Or Pause Non-Essential Spending

Non-essentials may make life more enjoyable, but in a crisis they are the easiest things to remove to free up cash. You can always add them back when things improve. Start with:

• Subscriptions: Cancel or pause streaming services, meal kits, subscription boxes, and premium app memberships
• Dining Out: Limit restaurant meals and takeout to rare occasions or eliminate them for now
• Impulse Shopping: Unsubscribe from retail emails and remove saved credit cards from online stores to reduce temptation
• Entertainment: Swap paid outings for free activities like library programs, hiking, or community events
  

Even modest cuts in these areas can add $100 to $500 back into your budget each month.

Step 4: Reduce The Cost Of What You Must Keep

When you’ve already cut back on non-essentials, the next step is to take a closer look at the expenses you can’t avoid. Essentials like groceries, utilities, transportation, and insurance will always be part of your budget, but that doesn’t mean they have to drain your wallet.

With a few smart adjustments, you can reduce the cost of these must-keep items without sacrificing your family’s health, comfort, or security.

Groceries

• Plan meals around weekly store sales
• Buy store brands instead of name brands
• Shop at discount grocers or ethnic markets for better prices
• Batch cook and freeze meals to avoid last-minute takeout
• If money is still tight, don’t hesitate to visit local food banks or community pantries. They exist to help families stretch their grocery budget during hard times, and many offer fresh produce, basic foods like rice, beans, pasta, and bread, and even household essentials.

Utilities

• Turn off lights when not in use and unplug electronics
• Adjust the thermostat a few degrees in winter and summer
• Wash laundry in cold water and line dry when possible

Transportation

• Combine errands into fewer trips
• Carpool with neighbors or coworkers
• Use public transportation if it is cheaper and convenient

Insurance

• Compare quotes for auto, home, or renters insurance to make sure you’re getting the best deal for the amount of coverage you have
• Adjust your coverage temporarily, such as increasing your deductible, if it lowers your premium
  

Step 5: Build A Bare-Bones Budget

A bare-bones budget is your survival plan. It focuses only on what you truly need to keep your family safe and your household running. This kind of budget is temporary. It is meant for crisis times, not forever.

How to build it:

1. Write down your monthly essentials from Step 2
2. Cut out or reduce everything that is not necessary
3. Give every dollar a job, like rent, food, or transportation
4. Leave a small cushion for unexpected costs

This type of budget shows you the exact amount you need each month to get by. It also gives you clarity and control, so if your income changes, you can adjust quickly without feeling lost.

Step 6: Stretch Every Dollar Further

Once you have reduced spending, focus on making the most of what you have.

• Cook in bulk: Use leftovers for lunches and freeze extra portions
• DIY repairs: Learn to handle small home or car fixes with online tutorials
• Shop secondhand: Look for clothes, furniture, and electronics at thrift stores or resale apps
• Swap and share: Exchange kids’ clothes, books, or toys with friends and family

Step 7: Find Temporary Ways To Increase Income

Cutting expenses helps, but even small boosts in income can take a lot of pressure off. 

Remember, this does not have to be permanent. Think of it as a bridge to get through this season.

Ideas to try:

• Sell unused items online or at a yard sale
• Pick up gig work such as delivery driving, pet sitting, or freelance projects
• Offer your skills to neighbors and friends: tutoring, babysitting, cleaning, or small repairs
• Ask your employer about extra hours or short-term assignments

Even making an extra $200 of income a month can make a big difference. It might cover your grocery bill, keep your lights on, or prevent you from dipping into savings.

Step 8: Avoid Creating New Debt

High-interest debt can make it harder to get through financially hard times. Whenever possible:

• Use cash or debit for purchases
• If borrowing is unavoidable, choose the lowest interest option and have a repayment plan in place
• If existing debt is overwhelming, explore your options like debt consolidation debt resolution through reputable programs like the ones offered by Americor

Step 9: Take Care Of Your Mental Health

Money struggles affect more than your wallet. They can take a toll on your peace of mind. Protecting your mental health is just as important as paying the bills.

Ways to cope:

• Stay connected with friends and family who can offer support
• Limit how often you check your bank balance so it does not consume your thoughts
• Try free or low-cost resources such as community support groups, meditation apps, or counseling hotlines

Taking small steps to care for your mind and emotions can help you feel stronger and more in control while you work through financial challenges.

Step 10: Plan for A Stronger Future

Every financial crisis can teach us resilience. Once things begin to improve, use the lessons you learned to build a stronger financial foundation:

• Start or rebuild an emergency fund, even if you can only set aside $10 a week
• Keep a simple budget year-round to spot problems early
• Be careful not to take on more debt than you can handle when times are good

Example Of  A 60-Day Turnaround

During the early months of the pandemic, a Florida couple saw their income drop by 40 percent, so they knew they had to make some financial changes. 

They paused gym memberships and streaming services, saving $120 a month. They switched to store-brand groceries, saving $70, and stopped ordering takeout, saving $180. They also sold unused tools and electronics for $450.

Within 60 days, they freed up about $370 a month and combined with the one-time sale, they built an emergency buffer of nearly $1,200 without taking on new debt.

Final Thoughts: Small Cuts Add Up

Cutting back during a financial crisis is hard, and it can feel overwhelming at times. Remember that every small step you take is progress. 

Start with the biggest expenses you can manage, protect the essentials your family needs, and remind yourself that sacrifices made today are paving the way for more stability tomorrow. 

You may not be able to control every challenge life brings, but you can create habits that protect your money and bring peace of mind. Be gentle with yourself because resilience is built one choice at a time.

At Americor, we understand the unique financial challenges people are facing today.

As America’s trusted source for debt relief solutions, we aim to empower you with financial knowledge that can lead to informed decisions, whether it’s about savings, investments, or managing debt.

If your debt has become unmanageable and you have difficulty making your debt payments each month, then you should consider a free consultation call with one of our certified Debt Consultants, who can provide personalized advice tailored to your specific needs.

By taking proactive steps today, you can put an end to your financial stress and work towards a brighter financial future. 

Remember, there is always hope for debt relief, and our team of experienced professionals are ready to guide you on your journey to regaining control of your finances.

For more information on Americor’s debt relief services, contact us today to see how we can help you eliminate your debts, and get on the fast-track to becoming completely debt-free!