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How to Improve Your Finances with a Bare Bones Budget

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A bare bones budget. The bare minimum living expenses.

That is what we are going to uncover today.

So, many times we get wrapped up in life with bills and spending that we confuse what are mandatory and discretionary expenses. Needs vs wants. The gray area is very difficult to see through.

If you have been caught up in that trap, don’t fret! You are not alone! All of us have.

That is why knowing your bare bones budget is helpful in many aspects of your life.

Do you need to start cutting expenses to the bone?

Needing to know this information is for everyone! Not just someone struggling to get by.

Let’s put it this way…if you have lofty money goals, then how are you going to reach them? If you want to get out of debt faster, what will help you get there faster? If you want to reach financial freedom, how can that be accomplished?

A bare bones budget will get you there faster. But, there is more than life than just living on a budget. That is for you to figure out.

Still a bare bones budget is key in so many ways…Let’s dig in and learn how to begin cutting expenses to the bone!

Get your finances in order with this free bare bones budgeting printable. Start saving money with these simple budget hacks. Real people use this to template to budget.

What is a Bare Bones Budget?

A bare bones budget is the absolutely minimum in your budget. The bare necessities.

Your bare minimum living expenses to live.

There are so many times a bare bones budget can come in handy. The purposes are many (which we will cover shortly) and its long term impact is significant.

The biggest benefit of a bare bones budget is to know how much you can live on and the rest can be considered overspending.

It doesn’t mean that every single day for your whole life, you need to live on a bares bones budget.

But, you have it in case you need to adjust things to make your life work.

But, maybe, a bare bones budget is a must to barely make it by. Living at or below the poverty line can be challenging. However, you must make sure you have the right money mindset to escape the hamster wheel of poverty.

Related reading: How to Live Below Your Means and Love Life

Purposes of a Bare Bones Budget:

bare bones budget

These are the primary purposes of a bare bones budget. The reasons for cutting expenses to the bone.

This is exactly how do you live on bare minimum.

1. Figure Out What is Important

Have you ever looked at your budget through a different lens? One that asks the question… “Does my spending line up with how I want to spend my life?”

That is where a bare bones budget comes in.

After taking the bare minimum living expenses into account, then you can decide what is important for you and what is just wasted spending.

You know how much money it takes for you to live on each month as well for an entire year. That is just to cover the minimum basic expenses.

2. Stop Living Paycheck to Paycheck

One of the fastest ways to stop living paycheck to paycheck is to live on the bare minimum living expenses. 

A bare bones budget will help you to finally get a solid emergency fund in place. So, you can finally get ahead with your personal finances. You are better able to weather the storm when you have a solid foundation. 

However, this is tricky because when you are in this stage you are terrified to stop spending money because of your current money mindset. This is all too common and that is why people get stuck in this cycle and are unable to break free.

Just remember… you can make living paycheck to paycheck “just a season” or you can get stuck in this hamster wheel. The choice is completely yours.

Related reading: Budget By Paycheck: Easy Tips To Maximize Your Income

3. Get out of Debt

How do you live on bare minimum?

The fastest way to pay off debt is to live on a bare bones budget.

Cover just the basic expenses and put the rest towards debt.

That will help you decrease the amount of interest paid as well as speed up your debt free date. Don’t know your debt free date? Then, use this calculator to figure out when you will be debt free.

Once again, paying off debt is “just a season” and won’t last forever if you choose to eliminate it.

4. Increase Saving Percentage

This one is specifically for the FIRE movement or those who want to save more money to reach financial freedom.

In order to save more money, then you have to cut back in expenses to increase your savings percentage.

The key is not to become burnt out on living on such a bare bones budget, that is backfires on you. Then, you start spending like a crazy person and end up in debt.

However, it is possible to greater increase your savings percentage by dropping some of the unnecessary extra expenses that you don’t really care about. Just because your friends have it, doesn’t mean that you need it too.

Use your bare bones budget (maybe with a few luxury preference thrown in) to increase that savings percentage yearly.

5. Amount Needed in Rainy Day Fund

Last, but not least, my favorite reason for having a bare bones budget. You can figure out the minimum amount of money for your rainy day fund.

This is paramount knowledge if and when you are hit with a personal or financial crisis.

With a bare bones budget, you know the exact amount of money needed to just get by. Forgo all of the extras and luxuries in order to weather the current storm. Your basis bare minimum living expenses will be covered.

Figure out the amount needed for your rainy day fund now.

Bare Minimum Living Expenses

bare minimum living expenses

These are the bare minimum living expenses you need. The four basic walls to keep you dry and safe, fed, clothed, and transportation to work.

When you need to cut expenses to the bone, it is crucial to focus on the bare needs in life.

Don’t expand out the bare minimum living expenses. For this purpose, we want to know our bare bones budget number.


This obviously is the biggest household budget percentage for anyone. This would include your mortgage or rent, insurance, and basic utilities.

Your shelter. The place you call home.

Note on Utilities…Once again, the need is to focus on the bare minimum of water, electricity, gas, sewer, and trash. The rest of the expenses are just extras (cell phone, internet, cable) that we can survive without.


Quality food is needed for your body to survive. Food that comes from a grocery store and you need to prepare yourself.

In a bare bones budget, there is no need to eat out, grab takeout, or go out to eat for lunch.

Stick with just your grocery budget.


bare expenses

This would include fuel, basic auto maintenance, bus or light rail pass. Maybe even your bike!

Transportation is the money spent to get from place to place, so you can make a living or a salary.

And if you have a car loan, that is explained down below under debt.

Medical Expenses

Health insurance is mandatory. 

Going to the doctor, medications, or meeting your deductible must be included in your bare bones budget.


Honestly, I struggle listing clothes here because this is about the bare necessities. Not the name brand clothing. The basics…

The stuff that is failing apart and you must replace it. Not clothes shopping because you are bored and want to.

And That Thing Called Debt

Unfortunately, debt payments are still due even if you came upon hard times. 

Debt will always be the cash flow killer!

Many times you can put your student loan debt on forbearance during hard circumstances. That will only stop the payments from being due. Interest still accumulates the longer it takes to pay off debt.

However, in the calculating your bare minimum living expenses, you will only include the minimum debt payment. Nothing extra.

Debt Resources for You:

Create Your Bare Bones Budget

what is a bare bones budget

Now, that we understand what bar minimum living expenses are a part of a bare bones budget, let’s figure out yours.

Creating your bare bones budget is similar to how to make a budget except you are cutting expenses to the bone. Just stay focused on the essentials.

So, let’s learn how do create a budget for bare bones.

1. List Out the Basics

From the list above, list out how much money you need for each of the following categories:

  • Housing
  • Food
  • Transportation
  • Medical Expenses
  • Clothing
  • Debt

If you’re not sure, then look at past credit card and bank statements. Pull out how much you are spending in each category and add them up.

To make it easier, grab our bare bones budget from our free printables section.

2. Want vs. Need

Some of your expenses may be in the gray area.

That is the same gray area that can lead to a live of debt, living paycheck to paycheck, and falling victim to lifestyle creep.

The key is the basic expenses. The true needs so you can life. 

The other stuff are extras or the wants we have.

3. No Extra Non-Essential Spending

bare bones budget template

Remember to remove all extra spending that doesn’t cover your bare minimum expenses.

This means no subscriptions, no manicures, no coffee trips, no happy hour stops.

Why yes, those things are wonderful and nice to have in your life. For now, we are focusing on the bare necessities.

Need help trimming your expenses?? Check this out.

4. Add It Up

Now, the time to add up what you spend to meet your basic needs. 

That is your bare bones budget.

We need a place to live, basic utilities on, food in our belly, a way to get to and from work, and clothes on our back. The rest of it is just extras.

Bare Bones Budget Template Worksheet:

A bare bones budget is just the bare minimum living expenses needed to survive and live. Get your free budget worksheet as a printable. Great money hack plus full of tips to improve your finances.

When to Use Your Bare Bones Budget?

making a bare bones budget

Life can throw you a curve-ball at any time and your bare bones budget will come in handy. These are the times you use your bare bones budget –  job loss, medical diagnosis, cross country move. The times to pull you out of a crisis. When cutting expenses to the bone is a must.

Others times it may be you are trying to get out of debt.

Increase your savings percentage to reach financial freedom earlier.

Maybe you are living at the poverty level and barely making it by.

By implementing a minimal expense budget, you will overcome the obstacles you are currently facing.

There is nothing wrong with using a bare bones budget. In actuality, it is a savvy money move instead of going into debt.

Budgeting Resources:

This is how I learned to make a bare bones budget. Stop overspending money, get out of debt, increase your savings percentage. Improve your finances with these free printables and worksheets.

Know someone else that needs this, too? Then, please share!!

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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

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