Creating A Bare Bones Budget
When your finances are in crisis mode, it’s time to trim your budget to its bare bones.
I believe everyone needs a bare-bones budget because life is so unpredictable. Changes in job status, health, or even marital status can happen quickly, and they often catch us off guard.
Creating a bare-bones budget before a crisis prepares you for the times when “life happens.”
I hope that you will never need to use this budget, but in the case of an emergency, you will be happy that you have one in place.
Want to watch the version of this video? Check it out here!
My husband and I had to use a bare-bones budget for two years. It wasn’t easy, but it eliminated a bit of our stress since we knew the minimum amount of money we needed each month.
Before we get started creating our bare-bones budget, I want to share a few tips to help when going through your budget.
Tips for Creating a Bare-Bones Budget
A bare-bones budget may seem simple, but it’s hard to comb through your budget and eliminate expenses.
We are accustomed to living the lifestyle that we have created for ourselves and it’s not easy to choose what stays and what goes.
Be Honest With Yourself
The first tip for creating a bare-bones budget is, to be honest with yourself.
This is the most important thing to remember.
The purpose of a bare-bones budget is to make it through the crisis by only paying for things that are essential.
Your essential expenses and my essential expenses are going to look different.
For example, my car maintenance and repairs categories are essential because I need my car to get to work 5 days a week. This same category would look different in a bare-bones budget for someone that works from home.
The goal is, to be honest with yourself about what needs to stay and what should go.
If you try to convince yourself that your Netflix, Spotify, and HBO subscriptions are all are essential to your well-being, you’re setting yourself up for failure.
Entertainment may be essential, but in this situation, you will need to eliminate a few subscriptions until you’re back on your feet.
Prepare for Unexpected Expenses
The next tip is to prepare for the unexpected. With any budget, you have to factor in unexpected expenses. There may be bills that you forgot about or yearly recurring expenses that catch you off guard.
Also, Things like medication refills or doctor visits are easy to forget about and can throw your budget off track.
Avoid this by making sure you’re budgeting at least a small amount toward unexpected expenses.
How To Create a Bare-Bones Budget
Making a bare-bones budget is a bit easier than your typical budget because your priorities are different and you won’t have as many expenses.
Here is my step-by-step process for creating a bare-bones budget.
Step 1: List your expenses
List all of your current expenses. The goal here is to cover your four walls (food, utilities, housing, and transportation), and cut the rest.
Step 2: Cut Non-Essential Expenses
Look at your list of expenses and decide whether you should keep, reduce, or cut each expense.
Step 3: Prioritize Your Necessities
Once you have adjusted your budget, it’s time to prioritize the remaining expenses.
Focus on the expenses that you need most for survival and that have the least wiggle room.
For example, some bills can be negotiated, but food is a higher priority.
Step 4: Review And Cut More
Use this step to double-check yourself. Have you been honest about the things that you need to keep? Is there anything else that you can cut or reduce?
Step 5: Add up Your Remaining Expenses
Once you have completed steps one through four, add everything up.
That’s the amount you need to earn or save monthly to afford your essentials.
The Bottom Line
Getting through tough times often requires making financial sacrifices.
A serious illness, the death of a family member, unexpected emergencies, and job loss create situations that force us to change our spending habits.
You might feel helpless when you’re in the middle of a crisis, but switching to a bare-bones budget can help stretch your money and relieve a bit of stress.
Now I want to hear from you. Do you have a bare-bones budget ready to go if life throws you a curveball?