I remember the worst month of my young family’s history. My hands shook as I stared at the budget. The numbers weren’t adding up. My husband’s severance check and unemployment benefits were there. My paycheck was there. But there was a big negative sign where there was usually a positive sign. We didn’t have enough money to cover the lighting bill, let alone the gas in our car.

It had been about a month since my husband was unexpectedly let go from his job. It was the kind of disaster we should have been prepared for, but because of our recent wedding and our lack of financial know-how, we weren’t. We had little in cash savings (most was tied up in our retirement plans), and we were not comfortable turning to our family to borrow the missing money we needed to pay our monthly bills, groceries, and rent.

It’s been a while since that horrible month, but the fear about how to handle this situation still haunts me. But this is, unfortunately, an issue for many families and individuals who are faced with an emergency (like my husband’s job loss) or who are living in poverty.

How do you decide what you should pay and what you shouldn’t? How do you prioritize your money so that the best choices are made for everyone involved?

My Take on What Bills to Pay Off First

There are no right or wrong answers to these questions. For every family, the situation is unique. But, for me, it’s all about Psychology 101.

You probably learned about that hierarchy of needs by Abraham Maslow. If you need a refresher, he believed that every individual requires foundations to reach their true self. Without the basics, you cannot move up to the next level.

Physiological Needs

The bottom of Maslow’s hierarchy is “physiological.” What do you need to live?

That’s easy. You need food, water, clean air, and shelter. When prioritizing your bills, it’s important to put these necessities as your top priority.

Your rent or mortgage should come first, with groceries and utilities (other than your phone) coming next.

Sure, you can cut grocery costs by shopping cheaply, using couponing apps like SavingStar, or existing on ramen noodles. You can even go to the food bank or apply for assistance when necessary. But you need to have money for food for everyone in your family, including pets.

Safety

After you’ve taken care of your foundation, the next level is safety. Make your second bill-paying priority all about safety. I’m talking insurance and health care costs. Medications make you safe. Having auto insurance makes you safe. You can, again, slim down on the coverage or ask your doctor for alternative medication for the time being, but going without is like asking for disaster to strike.

Love and Belonging

The third level is love and belonging. This is where it gets tricky to prioritize your bills. But think of it this way: What do you need to do to belong to your community so that you’re not passed over?

For my husband, he needed to get a job, which means he needed to be reachable. That means we needed to pay our cell and internet bills so he could make calls and fill out résumés online. For me to get to work, I needed a car with gas in it or money for rides on the bus and train.

For some, belonging may also be about debts and feeling the need to pay back what is owed. We had many debts at that time, including our car loan, student loans, credit cards, and more.

When we realized that, after covering all our other expenses, what was left over was our debts, we prioritized it by those with the highest late fees.

The Full Breakdown

Need a refresher or a list? Here’s how I recommend you prioritize your bills:

  1. Rent or mortgage
  2. Groceries
  3. Utilities
  4. Medical costs (copays for doctors and medicine)
  5. Insurance
  6. Transportation
  7. Phone
  8. Internet
  9. Debts by the highest late penalty

Ways to Further Cut Costs

Almost all the above items can be trimmed. For example, apply for help paying your utility bills, ask for a deferment on your student loans, shop frugally for food, or reduce the data on your cell plan. This list is made with the understanding that you have cut or downscaled as much as you can.

Have a budget item that’s not on this list? No worries. Prioritize it based on if it will help you make more money or stick to your normal, necessary routine. For example, a child’s school tuition or books should be up near insurance and transportation.

At the end of the worst month ever, we had two credit card bills that were late, and we went a month without driving to save on gas. But we didn’t suffer or starve.

My husband was eventually able to pick up some side work to make up for his loss of income. When we had the cash, we got current on everything. It was painful, but we managed to survive. And when we were back on our feet, we put all our efforts into establishing a solid emergency fund so we wouldn’t have to go through this again.