How to Cut Back to an Essentials-Only Budget

By Sofia Figueroa

If you recently lost your job or are struggling to make ends meet right now, you’re not alone. And — especially with the economy so uncertain right now — you’re probably looking for a way to cut back on expenses as much as you possibly can. An essentials-only budget could help. Here’s our advice for how to do that.

An illustration of a calculator.

Where to start

The first step is to go through what you’re currently spending money on. That will make it a lot easier to find opportunities to cut back. Go through your last few months’ bank and / or credit card statements and make a list (or spreadsheet) of all your typical monthly expenses, including how much you spend on each one. You can also use an online budget tracker or app. Include your fixed costs, aka things that are the same each month (like bills) and things that change each month (like groceries).

Here are a few ideas about where you might be able to trim.

Try to negotiate certain expenses

Fixed costs are a really good place to start because you’d save that money every month. Look at things like your cell phone contract, your internet service, even electricity — there are states out there that allow you to choose your electricity provider. Call and see if they’ll negotiate with you on price. You can also shop around for things like car or home / renter’s insurance.

If you have debt, you can also try to get your interest rates lowered. That can save you a lot of money in the long run. Call your provider and ask if they’ll lower your rate. Putting your student loans on autopay, if you can, might get you a discounted interest rate. Look into refinancing them if they’re privately held. Look for other credit card companies offering 0% balance transfer offers to help you save on your credit card debt, or consider applying for a personal loan to pay them off, since federal interest rates are really low right now.

Look for things you can live without spending money on, at least for now

Next, put each of your remaining expenses in a bucket: essential, cut back, pause, or cancel. Be really honest with yourself about what you need and what you don’t. These decisions don’t have to be permanent — once you get back on your feet, you can reevaluate them.

Everyday expenses

Right now, with so many of us sheltering in place, we’re already living without many “normal” expenses such as restaurants and going out. We might also be spending more on other things, like deliveries and groceries. So you may need to do this exercise again in a few weeks. For now, maybe you can swap some brand-name things you usually buy for more generic options. Or maybe you can press pause on most spending while you’re hunkered down. Consider holding yourself to a 24-hour waiting period on impulse purchases to make sure you’re making the decision with a clear mind and purpose.


You might have to pause them. Yes … maybe even Netflix, if necessary. See if you can swap them out for something else that’s free — for example, your local library probably lends movies through apps like Kanopy or Hoopla.

Meals and groceries

Planning your meals is oft-cited money-saving advice because it works. Once a week, plan out what you want to eat that week (we’re here for homemade pizza). Pinterest has allllll the meal-planning resources. Many grocery stores run weekly ads — check yours so you can plan your meals around what’s on sale. While you’re at it, do a little online comparison shopping — maybe the grocery store a few blocks further away has better prices. You can also look online for coupons (for the things you were going to buy anyway; you don’t really save money if you buy extra things for the sake of using a coupon). Then use your meal plan to make a grocery list to bring with you when you shop.

Make a spending plan

Once you’ve identified places where you can cut back, use the information you’ve gathered to make yourself a spending plan each month. The word “budget” can feel overwhelming — especially if you know you don’t have much money to work with — but tracking your spending and staying in control is way less stressful than flying blind. Here’s some advice for making a spending plan.

If you need to cut even more

If you’ve cut, paused, and canceled as much as you can and you’re still having trouble making ends meet, there are some emergency levers you can pull.

Request forbearance (or later, deferment) on your student loans

This is a better solution at the moment than it would usually be, if you have federally backed loans. Forbearance gives you a temporary reprieve from payments, but it’s typically not a perfect solution, because interest would continue to accrue on the loan and the amount you owe would keep going up. But right now, the CARES Act paused all interest in federal student loans and made it so that you can pause your payments, too (all you have to do is turn off auto-pay, if you have it on). So take advantage of that now.

If you need to extend your pause on payments longer than the CARES Act ends up allowing, deferment might be a good option for you at that time. It’s a lot like forbearance, except you have to qualify. Plus, after the pandemic ends, interest won’t be suspended during forbearance anymore — but interest is always suspended with deferment. So if you qualify, that’s probably going to be a better option. If you don’t, you could request to extend your forbearance (even though you’ll start accruing interest — you gotta do what you gotta do).

Request forbearance on your mortgage

The CARES Act requires providers of federally backed mortgages to allow anyone affected by the coronavirus pandemic to request forbearance for up to 180 days. It didn’t suspend interest, so that will still accrue, but there shouldn’t be any extra fees or penalties if you request a pause in payments. Just read the fine print to understand how your lender will treat the missed payments — you typically either have to pay them all at once at the end of the loan period, or your loan might be extended for the number of months you asked to pause payments.

If you’re making contributions to a retirement account, pause them

We don’t usually recommend this, especially if you have a 401(k) employer match (that’s free money), but if money’s really tight, it could be an option.

Switch your student loans to an income-based repayment plan

This option is one of the biggest benefits of federal student loans. Income-based plans typically last longer, so you’ll pay more in interest over time, but they can really help alleviate the pressure right now.

Try to negotiate a new payment plan with your credit card or loan providers

Many lenders would rather work with you than have you stop paying your monthly minimums altogether. If you can’t afford your payments, call them and see if they can help you lower them.

See if you qualify for government benefits

The Families First Coronavirus Relief Act expanded who’s eligible for benefits like SNAP (formerly food stamps), WIC, and Medicaid. Some states are expanding SNAP benefits to include online ordering and grocery delivery during the pandemic.


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Sofia Figueroa

Sofia Figueroa is a CFP® Professional at Ellevest. She works with Ellevest clients to help them take financial control and make a plan to hit their money goals.