Personal Finance Budgeting Priorities In An Income Crisis

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Setting priorities on spending is crucial to successful personal finance budgeting especially in an income crisis.  Our budgets need to be proactive.  They need to tell our money what we want it to do for us. 

I often think about how I would adjust my budgeting priorities should I lose my job or find myself in some other ultra-tight financial situation.  I believe that by acting quickly and decisively, I could significantly increase my chance of success.

A budget is a plan that should align one’s spending with our priorities.  In a crisis, I would use mine to batten down the hatches and ration my money to my top priorities.

Budgeting priorities when money is tight

The global economic crisis is tough on everyone right now.  The cost of living is up and a lot of people are losing their jobs.  When money is tight it is more important than ever that we set our budgeting priorities correctly.  I would start with the basics and go from there.

Here is how I would prioritize my money in a budgeting crisis:

1.  Groceries are at the top of the budget

We all have to eat to survive.  In a pinch, I would make food my top priority.  However, I would be sure that I was buying only staples.  My diet would not be anything fancy.  No restaurants and no T-bone steaks. 

In a personal financial crisis, my food might not be that enjoyable, but it would give me and my family what I needed to keep from going hungry.  I would buy things like macaroni, beans, rice, and potatoes.  I would avoid frozen dinners, soda, chips, desserts and other junk food that is too expensive.

2.  Paying the mortgage or rent

Once you are fed, then you need a place to live.  I own a home, so my next priority would be my mortgage payment.  I have too much invested to let my home fall to foreclosure. 

If I did anticipate falling behind on my mortgage, I would be proactive.  I would go to the bank and work something out ahead of time.  From what I hear, this will lead to a much better result.

The mortgage company may not scream as loud as some of the other creditors we owe, but I would still pay them first.  Harassment should not define our priorities.  I would definitely make keeping a roof over my head one of my top priorities.

3.  Transportation to and from work

When things are tight, we must earn as much income as possible.  Therefore, I would need some form of transportation to get to the first job I could find.

Fortunately, I don’t owe on my vehicles, but if I did I might have to let one or more cars go if the payment was large.  But before I did, I would figure out a transportation alternative.

Riding the bus might not be convenient, but it is better than letting my house get taken by the bank.  I would throw my pride out the window!  Crises are survived by making hard choices!  Choosing public transportation is an option I would seriously consider.

I might also think about walking, riding a bike or scooter, or carpooling as ways to save money while still getting where I needed to go.

4.  Utility bills

I would cut off everything except what I absolutely needed to survive.  I would do this as soon as possible!  Things like cable TV and cell phones are luxuries not necessities.  Ditching them would be some of my first steps.

I would then prioritize the remaining utilities in the order in which I would need them to survive.  As an example, here is how I might prioritize the utilities from highest to lowest:

• water and sewer service
• electricity
• natural gas
• telephone

Obviously, it would be uncomfortable to do without any of these, but if I can’t pay the bill, then I would have to let something go.  I want to control the situation as much as possible, so I would prioritize.  I would also take drastic steps to reduce my utility bills.

5.  Essential clothing

In a crisis, I would make sure my kids had what they needed to stay warm.  I don’t think clothes would be an issue for us unless the crisis lasted for six or more months, but kids do grow so I would need to consider clothing eventually.

I would not concern myself with fashion.  For me, this would be a time where function would rule.  I would shop for clothing at secondhand stores and even look for hand-me-downs from extended family members.

Clothing is important, but most of us can probably make do for a long time without needing to buy much.

6.  Credit cards would be the last to get paid

I am debt-free, but if I owed on credit cards or unsecured consumer loans, then these would be the last things that I would pay.  I might get a lot of harassing phone calls, but I’d just have to ignore them.

From what I understand, it would take these companies a long time before they actually sued me.  Therefore, I would put them off as long as possible.  I would hope that my situation would change before the worst occurred.

Setting the right budgeting priorities are key to surviving

I would want to make the right choices early to minimize the impact of a financial crisis on my family’s livelihood.  Some might think that my approach is radical, but I don’t think so.  Taking decisive action would put me in the best position to weather the storm for as long as possible with the minimum negative impact.  Failing to act is what leads many to bankruptcy and foreclosure.

Is there anything I missed in my crisis budget priorities?

Other articles that might be useful:
Back To Basics- 79+ Brilliant Budgeting Resources You’ll Love
Now Is A Good Time To Be Living On A Budget
How To Avoid Buying Things You Do Not Need!

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