How to Prioritize Your Bills in a Financial Crunch

When money’s tight, taking a hard look at your monthly expenses can feel overwhelming. But getting a handle on your bills can take some of the pressure off — especially if you don’t have an emergency fund to fall back on.

Some bills matter more than others, so when your income doesn’t cover everything, it’s crucial to prioritize what needs to be paid first. Some payments — such as housing, utilities or transportation costs — can have immediate consequences if missed, while others may be more flexible or negotiable in the short term.

In general, your top priority should be to cover essential needs first, so that you can avoid serious penalties if you fall behind. Here’s more on how to decide which bills to pay first when your budget is stretched thin.

The priorities for bill-paying, in order of importance

Before you start to pay your backlog of bills, get organized. Make a list of all the bills, including the amount owed and the due date within the month for each.

Then add the obligations up. If the total suggests you won’t be able to pay them all off by their due dates, it’s time to prioritize.

Then plan to pay them off in this order:

1. Housing payments

Taking care of your mortgage or rent should be your number one priority. Missing a payment can trigger some serious consequences, such as late fees, eviction notices, or — if missed repeatedly — foreclosure.

If you’re worried that you won’t be able to make the whole payment, contact your landlord or lender right away. You may be able to work out a temporary solution, such as making a partial payment or splitting the payment into two installments. But whatever you do, it’s important that you act quickly so you have enough time to explore assistance options in your area.

Many communities have organizations that help renters and homeowners struggling to keep up with rent and other bills. But those resources are typically easiest to access when you ask for support proactively.

2. Utilities

Keeping essential services like electricity, water and gas running in your home should be a top priority right after your rent or mortgage. If you fall behind, you’ll typically receive notice that your bill is past due and that payment is needed to prevent collection actions on your account, including the possible disconnection of services.

To prevent that from happening, call your utility provider as soon as you know you might miss a payment. Many companies offer payment plans, extensions or hardship programs to help customers stay connected. If your payment is already past due, ask about a payment arrangement, which typically allows you to break up your balance into monthly installments until it’s paid in full.

In the meantime, you can also look into potential programs in your community that offer utility assistance tofor those experiencing financial hardship. These resources can take time to access, so the earlier you start, the better.

3. Insurance premiums

Insurance provides a critical financial buffer in emergencies and should be relatively high on your list of priorities. While insurance might not feel as essential as keeping the lights on or paying rent, it can protect you from incurring much larger expenses down the line.

Without coverage, an unexpected hospital visit, car accident or home repair could lead to serious financial strain. Short lapses in coverage do happen, but it's best to avoid this if possible — otherwise, you could face high out-of-pocket costs. Most insurance companies won’t cancel your policy immediately after a missed payment and typically offer a grace period (usually about 30 days). If something happens after that lapse, though, you won’t be able to backdate coverage to retroactively cover an accident.

To stay protected, contact your insurance provider as soon as you know you may fall behind. Auto insurers, for example, are required to give notice before canceling your policy (the exact timeline varies by state). But even a single day without coverage can result in a higher rate — and in some cases, a lapse could lead to fines from the Department of Motor Vehicles.

4. Living essentials

Food and basic living essentials like toiletries and hygiene products are arguably the most important day-to-day needs on this list — but they tend to be more flexible in terms of cost. Unlike fixed bills, you can adjust how much you spend at the grocery store by cutting back, taking advantage of coupons or sales, and exploring food assistance programs or local community resources that offer support.

5. Car or transportation payments

If you rely on a vehicle to get around, keeping it running — and legally insured — should be a high priority. Without reliable transportation, getting to work or handling daily responsibilities can become more difficult — and potentially more expensive if you’re forced to rely on alternatives.

Missing a car payment can lead to late fees, damage to your credit score and possible repossession. If you think you’ll have trouble making a payment, contact your lender as soon as possible. You may be able to work out a short-term solution, such as an extension or refinancing (if your credit is in good shape).

And, if you can, budget accordingly for gas and basic maintenance. A dead battery or surprise repair — especially one caused by that funky sound you’ve been ignoring for months — can be just as disruptive (and costly) as missing a payment.

6. Debt repayments

When money is tight, debt repayment typically gets moved down the list of priorities — especially if making a payment means skipping the essentials.

That said, ignoring debt entirely can lead to late fees, sky-high interest charges and damage to your credit score. If you’re struggling to keep up, contact your lender before missing a payment. Many offer hardship programs, temporary forbearance or the option to adjust your due date.

If you can, try to make at least the minimum monthly payment on each account to keep them in good standing. Then, focus any extra cash on the balance with the highest interest rate. Just keep in mind that while making minimum payments helps you avoid late fees and penalty annual percentage rates, or APRs, your balance will still accrue interest — and it can add up quickly.

Still struggling? What to do next

Let’s assume you’ve done your best to juggle and prioritize your obligations this month, and even reached out to service providers — like your phone and internet company — to see if they offer hardship assistance or payment extensions.

If you’re still falling short financially — or likely to face the same situation again next month or beyond — it may be time to take further measures. Even if you feel confident about the near future, these moves might mitigate further cash crunches down the road.

Review your household budget

If you’ve gone through your bills and monthly expenses and still don’t have enough to cover everything, it may be time to cut back. Even minor adjustments can make a huge difference.

Start by reviewing your discretionary spending — things like takeout, streaming services and shopping for non-essentials. From there, cancel or pause anything that isn’t absolutely necessary. If you tend to order food delivery a couple of times a week, consider pressing pause for now. And if you have multiple streaming subscriptions that you barely use, consider consolidating, sharing with friends or family, or eliminating them entirely.

To stretch your grocery budget, try planning your meals ahead of time and making a shopping list to avoid impulse buys. Carpooling with a roommate or using public transportation can also help lower fuel costs if you need to run errands.

Change the monthly timing of bills

It's worth a look at the timing of your biggest obligations. The organization of your bills you did in this month may have revealed that too many of them have the same or similar due dates, month in and month out. If so, it’s often possible to request a later date within the month for expenses like credit cards, utilities and subscription services. (Just keep in mind that changes usually take one billing cycle to take effect, so this likely won’t offer an immediate fix).

Consider outside help

It may be time to consider reaching out to a nonprofit credit counseling agency. These organizations can work with you to create a plan to improve your financial situation by reviewing your budget, negotiating with creditors and helping you create a personalized plan to get back on track. Many offer free or low-cost services and are a smart first step before considering debt consolidation.

Debt consolidation companies typically combine multiple debts into a single loan or line of credit with one monthly payment — ideally at a lower interest rate. This can make debt repayment more manageable, but it’s important to proceed with caution. Some debt consolidation loans come with high fees or longer repayment terms that cost more over time. Take the time to carefully review the terms and compare some of the best debt consolidation loans before committing.