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As inflation remains high - and interest rates climb - paying bills has become increasingly difficult for many Americans. Indeed, 82% of adults as of October said they expected to be able to pay all their bills in full that month, down 4 percentage points from 2021, and near a level last seen in 2018, according to the Economic Well-Being of US Households report released by the Federal Reserve in May 2023. What's more, a United States Census Household Pulse survey from February 2023 revealed that 39.7% of consumers said it was 'somewhat' to 'very difficult' to pay their usual bills, up from 32.3% the year prior.
The biggest reason people are struggling to pay bills? Inflation. Over 90% of adults surveyed by the Census attributed price increases to their cash shortage. Pros say this underscores the importance of having an emergency fund of 3-12 months of essential income socked away in a high-yield savings account. And the good news there is that many savings accounts are now paying upwards of 4% (you can see the highest paying savings accounts you may get now here), so you're earning money on the money you are saving.
Beyond that, here are other ways to help combat the effect on inflation on your pocketbook.
Certified financial planner Blaine Thiederman at Progress Wealth Management recommends identifying essential bills such as housing, utilities and food and making sure those are paid first, before discretionary costs.
"Don't give up just because it's hard to make payments. Instead, keep paying what you can while avoiding borrowing more money. Unless you're planning on consolidating your high interest debt with a lower interest loan, you should avoid trying to borrow your way out of a monetary hole," says Jacob Channel, LendingTree's senior economist.
"When money is tight, the flexibility of credit card minimum payments seems awfully appealing but doing so comes at a high cost. Making minimums means paying down the balance at a snail's pace and with credit card rates over 20% on average, your finance charges will consume most of that minimum payment. If you can't afford to pay for your purchases in full, then don't look to a credit card as a magic solution," says Greg McBride, chief financial analyst at Bankrate.
If you have loans you feel you can't pay, talk to the lender. For example, see what your credit card company's options are that won't affect your credit score. "Look at your income, expenses and assets and see what your options are to pay your bills without too many late fees or needing to dip into your retirement savings. You might have more resources than you think, like a 401K loan," says certified financial planner Mark Struthers at Sona Wealth Advisors.
It can also be worth it to call your mortgage company, landlord, utility company and others to see if they have any hardship programs that would allow you more time to make your payments. "The website 211.org can also be a helpful resource with additional local support sources," says Kimberly Palmer, personal finance expert at NerdWallet.
Whether you're struggling to make monthly payments on time or you're falling behind on bills, seek help. "Nonprofit credit counseling agencies can help you get your financial house in order with budgeting assistance, debt management plans and negotiations for lower rates or monthly payments with your creditors," says McBride.