Bare-bones Budget: Why You Need to Create Yours Today

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Do you need help finding a way to build up that emergency fund, pay off debt, or navigate through a loss of income?

Or are you simply trying to get a handle on your finances?

If any of these are true, a bare-bones budget is the tool you need to get started. 

A bare-bones budget will give you the full picture of how much you need to survive. 

And with this valuable information, you will get a firm grasp on your finances. You will be able to make informed financial decisions that can help you meet your money goals and weather financial storms.

Let’s take a look at what a bare-bones budget is, why you need one, and how to create your own.

What Is a Bare-bones Budget?

A bare-bones budget is a budget that consists solely of your financial obligations (debt repayments) and essential living expenses. 

All of the wants (like streaming services and going out to eat) that typically bulk up our spending are eliminated. 

With the wants eliminated, you will be able to see exactly how much your basic needs cost. 

And knowing how much your essential needs cost each month will provide you with a base understanding of your finances. It will help you make tough, yet intentional decisions regarding your money when you need to.

Why Do You Need a Bare-Bones Budget?

A bare-bones budget is an invaluable tool in both good and bad financial times. 

Let’s look at a few ways it can help. 

1. A Bare-bones Budget Will Help Get You Through A Financial Crisis

A bare-bones budget will help you develop a plan to get through the tough times. 

According to an article in the Washington Post, by the time we are 60 years 80% of us will have gone through economic hardship. With a bare-bones budget, we can set ourselves up to get through these tough times.

Since a bare-bones budget accounts for only the amount of money you need to live on, you can use it in times such as job loss, a major health issue, or when a large unexpected expense occurs. It will help you make the tough decisions and decide what expenses can be eliminated when navigating through rough waters.

Your bare-bones budget will be your go-to when you need to free up as much money as possible to get through a shitty situation. It will help calm your nerves and give you a plan to get through the hard times.

2. A Bare-bones Budget Will Help You Meet Financial Goals

A bare-bones budget will help you meet your financial goals and start finally saving money from your salary

Do you feel stressed because you don’t have an emergency fund?

Are you sick of being in debt and owing people money? 

Do you want to save up for a down payment on a house?

Adopting a temporary bare-bones budget can help you cut back on expenses to achieve financial goals like these. 

And, even more exciting, by doing so you will also start to feel in control of your money. This is because you are intentionally making decisions for what you want your money to do for you.

Intentionally directing your money is a powerful feeling.

3. A Bare-bones Budget Will Open Your Eyes

Creating a bare-bones budget will expose your spending habits. And this is a good thing. 

Looking at your expenses in terms of what is absolutely necessary will bring to light all of the things you spend money on that are simply wants, and not needs.  

And when something is a want, it means that you have a choice as to whether or not that expense is worth it to you.

So if money seems a little tight each month, you can start by looking at the expenses that didn’t make the cut for your bare-bones budget.

These are the wants.  And they are the things you can stop spending money on to give yourself a bit more breathing room in your finances each month. 

For example, one of my wants is going out to a nice restaurant once a month. The expense is worth it to me. But it’s a want and not a need. Therefore, I know it can be cut out of my budget if I need to save money. 

By calculating your bare-bones budget, you will start to understand where you are spending extra money. And it will allow you to see where you can cut back when you need, or want to. 

How To Create Your Own Bare-Bones Budget

Creating your bare-bones budget has four simple steps. 

Step 1: Know Your Income

As with all budgets, it starts with knowing your income. Take the time to figure out how much money you are bringing in each month.

Step 2: Understand Your Current Expenses

If you already track your expenses, then you can move on to step three. 

If you don’t track your expenses, gather a few months’ worth of bank/credit card statements to figure out where your money is going each month. This is especially helpful for those variable expenses that can change, like groceries and household goods. 

This list of expenses will contain both your wants and your needs. It will be a snapshot of what your monthly spending typically looks like. 

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Step 3: Determine Your Essential, Bare Minimum Living Expenses

Now that you have a list of all of your expenses, you can separate them into two categories: essential (needs) and nonessential (wants).

Think about each expense critically. Do you really need it to survive? And if you do, can you cut back on the expenses further to truly only account for you needs.

For example, you may normally spend $400 on groceries each month. But for your bare-bones budget you may only need $300 because you will cut out some nonessential foods or make an effort to shop the sales more. 

Essential expenses are:

  • Rent/Mortgage
  • Groceries, including pet food
  • Household goods such as toilet paper, soap, etc
  • Minimum debt repayments
  • Utilities
  • Insurance Premiums
  • Clothing (bare minimum)
  • Car Maintenance/Fuel/Transportation Costs (needed to go to and from work)
  • Health needs, such as prescriptions
  • Daycare
  • Personal Care 
  • Any other needs you can think of

Nonessential expenses are:

  • Cable tv/streaming services
  • Unnecessary data or features for cell phone
  • Dining out
  • Vacation spending
  • Gym Memberships
  • Any other wants you can think of

Your list of essential expenses will be your bare-bones budget. 

While your list of nonessential expenses will be the things you can cut if you need to lower your expenses or save money. 

Step 4: Calculate Your Bare-Bones Spending

Once you have your list of essential expenses, you can add up, and the total will be the monthly amount you need to survive. 

As you can see creating a bare-bones budget is a simple process that anyone can do.

You don’t need to be a financial expert to understand where your money is going.

And you don’t need to be a financial expert to use that information to make wise money decisions. 

To help you on your journey, I have created a downloadable worksheet to help you create your very own bare-bones budget. 

Image of Bare-bones budget that you can click to download the template

You Got This

You can start to take control of your finances by understanding what your bare-bones budget is. 

The information a bare-bones budget provides you is invaluable. 

It will be your fallback in times of financial hardship.

It will help you reach your financial goals.

And It will open your eyes and help you distinguish between your wants and your needs. 

Your bare-bones budget will be your guide to making intentional money decisions. 

And when you start to make spending decisions intentionally, you will feel more in control of your money (and your life). 

So, go ahead, download the Bare-bones Budget Worksheet and get started today. 

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Picture of Melody Creator of Cash for Tacos

Hi! I’m Melody and I want to help you create a vision for your life and provide you the necessary tools to use your money to make your vision a reality. 

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