How To Create A Bare Bones Budget

Bare bones budget

There are many different ways to come up with your perfect budgeting strategy. Alongside your monthly budget, you should also have a bare bones budget waiting in the wings.

Even if you don’t need to cut expenses to the bone right now, it’s a good idea to know how to create a a minimal expense budget and have it at the ready, so you are prepared in case of a financial emergency.

Here’s how to do it.

What is a bare bones budget?

It’s a budget that only covers the necessities. This means you will only spend enough money to survive with the basic essentials and fulfill your minimum financial obligations.

With a bare bones budget, you do not leave any room for extra spending.

Sound restrictive? It definitely is. That’s why this is not a sustainable long-term budget.

In normal conditions, you should also leave space for you to buy things you don’t necessarily need but that you want—like vacations, nights out, and lattes. (That’s right—treating yourself to lattes will not lead to financial ruin.)

On the other hand, this budget is a short-term solution to help you get through a period of financial distress.

Who needs a bare bones budget?

While it may seem dire, there are a lot of different reasons why you may need to cut expenses.

When you experience income loss

Most often, people turn to a restrictive budget when they need to cut expenses to the bone because they are experiencing some loss of income. For example:

This is why it’s so important to have an emergency fund. While cutting expenses to the bone is likely necessary when you lose income, having an emergency fund as a cushion will really help take the pressure off when you’re in a money-tight situation.

When you want to save a lot of money fast

That said, there are also times when you may want to switch to a bare bones budget even when you haven’t lost any income. For example:

Swapping your regular budget for a minimal one for a few months can definitely help you slash expenses so you can save up a big chunk of money fast.

When you want to be prepared

Even if you’re not ready to start cutting expenses to the bone, it’s still a good idea to create a bare bones budget.

If you create one before you need it (hopefully, you won’t ever need it!), then you’ll be ready to cut your spending right away in the event of a financial emergency.

How to create a bare bones budget

Only three steps are necessary to get started.

1. Make a list of your necessities

First, start by printing out all your bank statements and credit card statements from the last month. This gives you a look at your current spending—which may be a lot different than you think.

According to Mint, 65% of Americans don’t know how much they spend each month. Be diligent! Look carefully and use a highlighter to identify only the essential expenses.

2. Make a list of what you need to cut

Next, see everything else in your statements that isn’t highlighted? That’s what you need to cut from your monthly spending. Yup, it’s about cutting expenses to the bone.

In addition, take note of any non-essential expenses that are automatically deducted from your account or charged to your credit card—and cancel them.

3. Use a budgeting tool to stay on track

Finally, use a budgeting tool to document your new budget. Having everything organized and written down will help you stay accountable and stick to your budget.

Also, it’s a great idea to give yourself a timeframe for how long you expect to use this type of budget. Remember, a bare bones budget is simply a temporary measure; once you’re out of your money-tight situation, you’ll have to reevaluate your spending.

Key considerations for a bare bones budget

Everyone’s budget will look different because cutting expenses to the bone looks a little different for everyone.

Of course, there are some general rules of thumb to follow. The following expenses are usually non-negotiable.


  • Mortgage/rent
  • Property taxes
  • Homeowners association fees


  • Heat
  • Electricity
  • Water
  • Air conditioning

To shrink your monthly bills, try to reduce your use of utilities as much as possible.


Particularly, this is a hard one to whittle down. But when you’re lowering expenses, you need to remind yourself to only spend money on essential groceries.

Believe it or not, according to the American Journal of Agricultural Economics, the average American household wastes $1,866 worth of food every year. That’s a lot of waste—and a lot of lost money!

Fortunately, learning how to meal prep can go a long way in helping you stick to a tight food budget so you can avoid waste. On top of that, remember to check out what coupons are available at your local grocery store to save more money.


  • Car payment
  • Gas
  • Parking
  • Public transportation

Debt repayments

Don’t forget to include debt repayments in your bare bones budget!

While it may seem like this is something you can skip, doing so will just make your pile of debt grow with increasing interest. Plus, continuing to make debt payments will help you maintain a good credit score even during a money-tight situation.

When you’re cutting expenses to the bone, just focus on the minimum monthly payments. But if you’re adopting a bare bones budget to save money to pay off your debt faster, then you can reallocate the money you save from other expenses to make bigger debt payments.


  • Reduce your phone plan to the cheapest plan possible


  • Same thing here—reduce your Internet plan to the cheapest plan possible

Health care

  • Medications
  • Co-pays for appointments
  • Over-the-counter treatments


  • Health
  • Auto
  • Life/disability
  • Renter’s

Certainly, insurance is something you want to keep—even when you have to switch to a bare bones budget. To help cut expenses to the bone, try calling your insurance providers to see if they have any discounts you can use.

Retirement contributions

Your long term retirement savings might be impacted by your budget especially when you are cutting expenses to the bone.

If you still have a job

If you are employed keep on making contributions to your retirement account. You may prefer to hold off on extra contributions to your retirement account for now, depending on your situation.

But if your employer offers matching in a 401k for example, then keep contributing at least as much as your employer will match.

If you lost your job

If you don’t have a job and you’ve been contributing to your own traditional or Roth IRA outside of your employer, then you may decide to stop making contributions to your retirement account for now.

That’s okay for a few months—above all, you want to avoid dipping into your retirement savings to cover expenses.

Family expenses

  • Daycare
  • School tuition
  • Alimony
  • Child support

Personal care

  • Toiletries
  • Work clothes
  • Haircuts as needed for work

Pet care

  • Pet food
  • Medications
  • Vet bills

Bare bones budget example

Here’s an example of a budget that has only the essentials based on a monthly income example of $3,500. It goes along with the categories discussed above.

Category Amount
Mortgage or rent $1,000
Utility bills $250
Groceries $400
Car or transportation $200
Emergency savings $200
Debt $150
Phone $150
Internet $50
Healthcare $100
Insurance $200
Family expenses $500
Personal care $100
Pet expenses $200

This example totals $3500.00. You can adjust the expense numbers to fit your personal situation. If you find that you have extra money left, don’t spend it. Save instead, pay off debt, or contribute to retirement, depending on your circumstances.

What you shouldn’t spend on

Now you know what’s essential, but here’s what to avoid adding to your expenses.

  • TV
  • Streaming subscriptions
  • Music subscriptions
  • Any other unnecessary memberships or subscriptions (e.g., magazines, newspapers, gym, etc.)
  • Clothing
  • New clothing
  • Non-essential travel
  • Non-essential personal care products (e.g., cosmetics, manicures, etc.)
  • Restaurants and bars

Sticking to your budget and splurging

If you’re truly in crisis mode and need to cut expenses to the bone, then you’ll need to halt all unnecessary spending.

However, if you’re using a bare bones budget to get out of debt or save for a big financial goal (e.g., a down payment on a house or a wedding), then making room for a monthly splurge can actually be a good idea.

Leaving room for one monthly splurge (like a dinner out or a manicure) can give you a tiny bit of relief from the strict rules you’re following.

Prepare now—don’t wait for an emergency to create a bare bones budget

Even if you don’t need a bare bones budget right now, having one outlined and at the ready is always a good idea. This way, if you’re ever in a money-tight situation, you can relieve a bit of the stress by being prepared to cut expenses fast.

Above all, having a good budget (and sticking to it!) is the key to financial wellness—no matter your current financial situation. You can also discover other creative ways to cut back on your budget!

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