When times are tough or uncertain, switching to a bare bones budget can extend your ability to manage through the uncertainty. A bare bones budget is a streamlined version of your original budget that only includes the minimum to run the household and meet your financial obligations. The pandemic has brought about the need for a bare bones budget for many especially those who have been furloughed or had their hours reduced. Planning ahead for your bare bones budget is key in being able to implement quickly and manage through. Implementing a bare bones budget requires just a few steps. Here are a few steps to get started with creating your bare bones budget.
Review your expenses and identify and eliminate any non-essential expenses. Non-essential expenses are things you don’t need to maintain your household such as subscription services, memberships, personal care (hair, nails, spa) and shopping. Eliminate anything that is not required to keep a roof over your head, food on the table and the lights and heat on. The idea here is to redirect that money back to the essential expenses, until things turn around.
Next go through and see if you can reduce any essential expenses. Essential expenses are things you need to maintain your household such as mortgage or rent, electricity, groceries, and transportation. In identifying areas to cut back on, groceries may be a place to start. Try switching to alternative lower cost brands or choose meals where the ingredients are on sale. It’s time to be creative. Another area you may be able to reduce is utilities. Call and see if you can set up your utility payments on the budget plan where you pay a standard fixed amount every month and then once or twice a year catch up on the difference.
When it comes to debt pay ONLY the minimum due. I normally don’t recommend this but keeping as much money as possible is important.
When managing your bare bones budget, it is important to track ALL of your expenses and continue to adjust as needed.
Have you had to adjust to a bare bones budget?