You can download the Free template here: Bare-bones-budget
I first heard about a Bare Bones Budget when I was working at a grocery store in central Stockholm. It was my first full time job and it was awful. Every day I encountered frustrated parents, disgruntled office workers, desperate teenagers and depressed pensioners. Everyone had to buy food. Everyone had to interact with me, and if they were having a bad day, I was often made a target.
Don’t get me wrong, some customers were wonderful, but after being yelled at for scanning items too quickly, for looking at someone the wrong way or for simply existing, it was hard to remember the good ones.
I had a coworker named Charlotte who was the opposite of me. Always cheerful, always smiling, always laughing. I remember sitting behind her, watching her talk to an older woman who was having a terrible day. The woman was cursing and throwing items up on the conveyor belt, huffing and puffing like the world offended her. I was waiting for the woman to tell Charlotte to f-off but instead she looked up at her and smiled. I don’t know what Charlotte had said but the smile was genuine.
One day, I was again sitting opposite to Charlotte when an older man said something in a harsh tone to her. I waited for Charlotte to put on a smile, say something nice and disarming, like she always did, but this time she stood up, logged out of her station and rushed off.
I later encountered her in the break room and saw that she was still upset. I asked her what was wrong and she said “I can’t handle it today.” I asked her why and she told me that her best friend had been killed in a car accident two days ago.
Since I was known as the ‘Budget girl’ she pulled out a piece of paper with numbers on it and showed it to me.
She said it was her Bare Bones Budget. The amount she needed to survive each month. I asked her why she had made it and she told me she needed to take time off. She needed time to grieve. Her Bare Bones Budget showed her how long her savings would last, and she wanted me to have a look before scheduling a meeting with the store owner. She said it would give her a few months to process her loss and a few more to look for another job if our boss decided to not let her come back.
I was impressed. I looked at her calculations and notes. She could live for 10 months without working, just from her savings alone. I told her to go for it.
So what is a Bare Bones Budget?
A Bare Bones Budget (BBB for short) is an essential piece of information that can help you, even when you don’t need to use it. It tells you what it costs for you to survive, every month, with no unnecessary extras.
Why do I need one?
It’s very useful to know what your essentials are, what you need to survive. If you pack for a hike up a mountain, you have to make sure that you bring the things you need. Food, water, a tent if you’re out there for more than a day. It’s not easy to remember these things. If you are rushed or distracted, you can forget a crucial item and become vulnerable to the elements.
The same goes for money. Knowing how much we need to survive each month is nothing but power. We can make sure we have enough liquid assets to cover our expenses if we lose our job, become ill or lose a loved one. We can know how many months the emergency fund will last.
If a sudden, unexpected and urgent expense comes up one month, we don’t need to sit down and add and subtract from our normal budget. We look at our Bare Bones Budget and anything above our BBB amount is ready to be put to work.
Another useful thing about a Bare Bones Budget is that it’s usually quite boring stuff. It’s utilities, groceries, transport etc. Not the things we fantasise about when bored (although to be fair, food does play a big part in many of my day dreams…).
So this is a chance to challenge ourselves to make our BBB amounts as low as possible. Financial minimalism. Slash the costs of things that don’t excite us, and put it towards something that does. When times get hard, we’ll be grateful that our Bare Bones Amount is already low.
How do I set up my Bare Bones Budget?
Make a list of all your expenses. If you already have a budget, great, you can use that. Go through each expense and determine what would happen if you stopped paying for it right now.
If you stopped paying rent, you’d be evicted. If you stopped buying groceries, you’d starve. If you stopped paying electricity, you’d freeze. These are examples of Bare Bones Budget items.
If you stopped buying coffee every morning and started making your own at home? Nothing bad would happen. This is not a Bare Bones Budget item.
After you’ve listed all your necessary expenses, you add them all up. The sum you’ve reached is your Bare Bones amount.
For example, if you need £1,000 a month to survive and you have £7,000 in liquid assets, you can survive for 7 months if you lost all your income.
It’s simple. It’s effective. It’s useful.
Finally, look at your Bare Bones amount. Respect it. The next time you want to drop that amount on something you don’t need, remember that it could have kept you afloat for a whole month.
Charlotte returned to work after three months with most of her savings unused. She was back to her smiling and cheerful self in front of customers, the grief only showing during the silence of break time. I told her that I had gone home and made a Bare Bones Budget of my own after I had last spoken to her. She laughed and said it was ironic that she had taught me something about money. I told her that everything I knew about budgeting, someone had taught me, and that the best lessons often come from people like her. People who solved a problem they were facing.
You might not be in a situation where you have to follow the Bare Bones Budget right now, but it could happen. If it happens (touch wood), you’ll want to be prepared for it.
You can download the Free template here: Bare-bones-budget