Solutions If You’re Having a Hard Time Paying Day-to-Day Expenses

If you follow personal finance news, you’ve probably seen an increase in the number of people struggling to cover their everyday expenses.

You may have even experienced this yourself or know people who have. You aren’t alone if you find yourself relying on debt or other solutions to pay your bills.

A recent MarketWatch study found that as inflation rises and incomes fail to keep up, more people rely on personal loans to cover their day-to-day living expenses.

Keep reading to learn about why Americans are struggling to meet their financial obligations, whether a personal loan could be the right solution for you, and what alternatives are available.

Americans Are Struggling to Pay Their Day-to-Day Expenses

Personal loans have long been popular tools for debt consolidation, home improvements, and large one-time purchases. However, a recent MarketWatch survey found that one in six borrowers, about 14.5%, uses their personal loan to help cover their day-to-day living expenses. In fact, this has become the fourth most common reason for getting a personal loan.

So why exactly are so many people turning to personal loans to help pay for their daily living expenses? A significant reason is inflation. You’ve almost certainly noticed that prices have increased in recent years when you’re at the grocery store or making other purchases.

Inflation has fallen to a more reasonable level in 2024 — the latest report from the Bureau of Labor Statistics shows that it was 3.3% in May 2024. However, it reached much higher levels throughout 2023 and 2024, peaking at 9.1% in June 2022. And though prices aren’t rising as quickly as they were then, they haven’t gone down.

Of course, rising prices aren’t the only culprit. Data shows that real wages are growing faster than inflation. However, many people increase their standard of living when their income rises. When you combine lifestyle inflation with actual inflation, it’s easy to see why people struggle to cover their daily expenses.

The good news is that there are solutions available if you’re struggling to cover your living expenses, whether it’s an ongoing problem or the result of a current financial hardship.

Personal Loans as a Solution for Everyday Expenses

If you’re facing financial hardship and are struggling to cover your living expenses, a personal loan could be a good option. A personal loan is a lump-sum loan, meaning you receive a large amount at once and then pay it back over a long period, usually between one and seven years.

Of course, you’ll also pay interest on your loan and may also pay fees, including an origination fee and late fees on any late payments.

While personal loans aren’t the best fit for every situation, they may be suitable if you’re facing a temporary hardship and need a bit of help to get through it. You can borrow money and use it for your bills or other expenses until you’re back on your feet.

A personal loan could also be an excellent solution to help consolidate credit card debt after a financial hardship. For example, suppose you lost your job and had to put your expenses on high-interest credit cards for a few months. Once you’re back on your feet, you could use a personal loan to consolidate that credit card debt at a much lower interest rate.

Compare Financial Solutions

Finding the right lender could help you save hundreds or even thousands of dollars. The best way to know if you’re getting the best loan rate is to compare offers from competing lenders.

What Do People Use Personal Loans For?

In a recent survey, borrowers revealed the most common reasons they seek personal loans as a financial solution. While debt consolidation came in first place, 14.50% of respondents reported they used personal loans to pay everyday bills.

Is a Personal Loan Always the Right Solution?

Though personal loans have plenty of advantages, they may not be suitable for every situation. If your basic living expenses are more than your income, a personal loan probably won’t help because you’ll then have a monthly loan payment to make for several years. If you’re already having a hard time paying your bills, an additional monthly payment won’t help.

Though personal loans can be a good option when dealing with a temporary financial emergency, they may not be available if you lose your job and need help paying your bills. Lenders generally require a reliable source of income to qualify for a personal loan. You may not be eligible for most personal loans if you’ve lost your job.

Other Solutions to Pay for Day-to-Day Expenses

Though a personal loan has many uses, it may not be the best option for covering day-to-day expenses for some people. Here are a few alternatives to consider, whether facing a one-time financial emergency or having a consistent budget shortfall.

Emergency Fund

An emergency fund, as the name suggests, can help you through a financial emergency, whether it’s a job loss, an unplanned expense, or something else. It can help you cover a significant expense, such as a medical bill you weren’t planning on. And if you lose your job or your income is temporarily reduced, it can help you pay your bills.

An emergency fund requires planning ahead, but it won’t necessarily help if you’re already in a pinch and don’t have one saved.

On the other hand, if you aren’t currently experiencing any financial hardship, now is the time to start building your emergency fund. Even if you can only put away a small amount each month, every little bit helps if you run into financial roadblocks down the road.

Credit Cards

While credit cards aren’t ideal for expenses you can’t pay off right away because of their high interest rates, they can be a good option in a pinch. If you’re in a budget shortfall for one month and can’t cover all of your living expenses, a credit card can help you make up the difference.

If you know you’ll have to rely on a credit card for your living expenses for a while, consider applying for one with a 0% introductory offer so you don’t get stuck with a high interest charge. And once you’re back on track, pay down your balance as soon as possible to help avoid paying interest.

Cash Advance

A cash advance is another option that can be used as a temporary solution when you’re facing a budget shortfall. A cash advance allows you to borrow money, often from your credit card. However, many cash advance apps now allow you to get an advance on your next paycheck. You borrow a small sum of money in exchange for a small fee. You’ll repay the loan within a couple of weeks when you get paid.

While a cash advance could be a good option for an isolated use, it shouldn’t be something you turn to on an ongoing basis. Cash advances often have high interest rates and fees, and if you need help for more than just this month, there are likely better options.

Equity Financing

If you own a home, equity financing could be an option to pay for some day-to-day expenses. Several equity financing options exist, including a home equity line of credit (HELOC), home equity loan, and cash-out refinance.

A home equity loan could be a good alternative to a personal loan to help you through a temporary financial emergency at a lower interest rate. Meanwhile, a HELOC could be an option if you need cash available to tap into over a more extended period and don’t necessarily know how much you’ll need.

Increase Income and Reduce Expenses

Borrowing money can be an excellent solution to help you through a month (or even a few months) of a budget shortfall. However, it’s not ideal if your expenses are consistently higher than your income. If that’s the case, you’ll need to address your income or expenses.

First, budgeting can be a good way to see where you’re overspending and can afford to cut back. Alternatively, if you can’t — or don’t want to — reduce your expenses anymore, consider finding ways to increase your income, whether through a side hustle, a raise at work, or a new career altogether.

Financial Assistance

If your income isn’t sufficient to cover your monthly expenses and you’ve already cut back where possible, you can rely on the many financial assistance options available.

Financial assistance can come in many different forms, whether it’s help from family, local nonprofit organizations, or government programs. If you need help figuring out where to start, reach out to your local human services agency, which can often point you in the right direction.