A bare bones budget is probably one of the most important things you can have in terms of managing your finances. If you’re wondering what the hell a bare bones budget is, and how you would go about creating one, then you’re in the right place.
What is a bare bones budget?
Remember the Ronseal advert? It’s exactly what it says on the tin! A bare bones budget includes everything you need to pay for in order to survive. Just.
This is the budget that you determines the smallest amount of income that you could legitimately survive on. It isn’t only useful in the event of a full scale apocalypse (although it would deffo be useful then) but can help you navigate even the toughest of financial situations you might find yourself in.
How my bare bones budget helped us survive this year
Like most people, towards the end of 2017 we started planning our finances for the coming year. We were all set to be waaaaay better off in 2018 than we had been in 2017, until December’s pay check threw us a total curve ball.
Mr C switched jobs, and we didn’t anticipate the shortfall in wages during the switch. His pay check for December was just over £800, and he wasn’t due to be paid again until the end of January. Totting up his pay check and the tiny amount of in-work benefits we were due to receive, I knew that my bare bones budget needed to do us some serious favours. And it did.
A second curve ball came hurtling our way towards the end of January when the car broke down. Thankfully, with some very tight budget reassignment, and knowing that we’d utilised our bare bones budget to its full potential all month, we caught the damn ball and threw it right back where it’d come from!
I can’t live on that!
Our gut reaction when we saw our bank balance at the end of December was
“We can’t live on that!”
But it didn’t take long to realise that, actually, yes we could. The whole point of a bare bones budget is that it plans for the months when you’re going to just scrape by. It’s not designed to take into account lunch out with the kids, or a cheeky Starbucks.
Living on bare bones budget has the added bonus of really making you re-evaluate where all your money goes each month. I hear people who are in similar financial situations to us saying they’re flat broke all the time. While they might not be balling (we’re certainly not!) they’re probably not as hard up as they think they are, or at least they don’t have to be.
So what do you include?
For most people, the basics of a bare bones budget are roughly the same. What do you need to live on in order to eat, function as a normal human being, stay alive, and get to work (to earn more money)?
Housing costs (rent or mortgage)
Car costs (repayment/tax/insurance/petrol)
Any other essential travel costs
Groceries (food/basic toiletries/essentials for the kids)
What about all my direct debits?
If you find that you suddenly need to utilise an extremely tight budget like we did at the beginning of 2017, and you don’t have time to strip your household of all the non-essentials, then you will need to include any other financial commitments you’ve already made. Things like;
Gym membership (unless you’re out of contract)
But I strongly advise trying to switch as many of these things to rolling one-month contracts as soon as you can. Even if you can afford them now, there may come a time when you need to cancel them at a moment’s notice. The last thing you want to do when you utilise your bare bones budget is create debt by ignoring or failing to meet financial obligations you’ve already made.
Should I only use a bare bones budget in a crisis?
The short answer is no! A bare bones budget is perfect for giving your bank account or savings balance a quick boost. It’s also an amazing way of taking life back to basics. When we had to utilise ours suddenly, I was a bit nervous that my kids would suffer. But what actually happened is that we spent loads of time outside, exploring some amazing places right on our doorstep. We found free activities I didn’t even know existed near us, read lots of new books from the library, and spent more time together just shooting the breeze.
A bare bones budget month can be tough, but it doesn’t have to be. Shifting your mindset a little bit to focus on what you do have, rather than what you don’t, works wonders for the whole family.
I don’t think I need this…
There are so many occasions when your bare bones budget will help you make big life decisions. Most of you will remember the tug towards the end of your maternity leave; do you really have to go back to work? Say you went back to work because you felt you had to financially. Maybe a bare bones budget could have helped you to see that you didn’t have to after all; it did for us!
For those of you, like me, who gave up their career, or switched to part time, when the kids came along, but eventually want to make your own money from home just like I am; a bare bones budget will help you work out exactly what you need to earn in order to walk away from traditional work altogether. The chances are you won’t need to replace your full salary, because you can more than likely survive without it all.
Future proof your life with a bare bones budget
Having bare bones budget in place means that you’ll always feel secure in the knowledge that you have a ‘back up plan’ should your finances change. Just knowing that you have the security of a budget you can survive on no matter what takes the pressure off every day.
You might not use your budget this month, or even this year. But one day you’ll need it and it’ll be there, ready to do its job. It might be because traditional work dries up. But it could also be the one thing that’s holding you back from following your dreams.
Creating your bare bones budget will probably only take you a few minutes, but it could be the that convinces you to go for it! Set up your Etsy shop or your blog, take your hobby to the next level, or even set up a fully fledged business from the comfort of your own home.
So what’s stopping you?
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