CREATING A BARE-BONES BUDGET | Budget Tips + Low Income

welcome to the budget mom youtube channel i'm kamika love from thebudgetmom.com today we're going to be talking about the subject of bare bones budget more importantly what i like to call it a temporary budget or a temp budget and there's a very specific reason why i call it that now you may use a bare bones budget in your life for many different reasons too specifically today i'm not going to just talk about what a bare bones budget is i think it's going to be incredibly helpful to show you how to create this in your life so that's what we're going to be doing today we're going to be creating a bare bones budget so let's talk about what a bare bones budget is a bare bones budget is throwing out and getting rid of all extra spending and only spending on the necessities to live before we get into when we might use a bare bones budget in our lives first i want to talk about why i like to call it a temp budget or a temporary budget when you say bare bones budget it kind of has this negative feeling when you say it out loud like you're not as successful as you should be or you're not doing what you should be bare bones it just has this to me this negative feeling me calling it a temporary budget has to do with mindset it's about restructuring what this tool is in our lives it's temporary we are temporarily using a bare bones budget or a temp budget for one specific season in her life knowing that that situation is going to improve it's something that we need to do in order to improve our financial situations for later so i like to call a temporary budget because it's just a reminder a constant reminder reminder hey this isn't my permanent place this is a season of my life where this is going to be the best tool to help me so i call it a temp budget today for the purposes of this video we're going to be calling a bare bones budget so let's talk about when you might use this type of tool in your life this type of budgeting tool there's two different modes that i like to talk about when using this one is crisis mode and the other one is intense goal mode crisis mode is when you either have a pay cut you lose a job maybe your partner has lost their job and so you're down to one income crisis mode really has to do with a decrease a substantial decrease in income which means you have to offset your spending in order to compensate for that drastic change of income and what you have to spend an intense goal mode is when you are wanting to reach a financial goal whether it's a savings goal or a debt goal very quickly quicker than what you had planned that could look like maybe in six months you have a trip that amazing opportunity and trip with your sister that came up out of the blue and you have six months to save and be financially prepared for that trip maybe it is paying off debt maybe you're in this intense mindset of wanting to pay off debt and you want to do that as quickly as possible that's when you would bring down your spending to the necessities and use a bare bones budget so crisis mode and intense goal mode is when you would use a tool like this another reason i like to call it a temp budget is because it reminds us that this tool is not best used for the long term it's a tool that can drastically help us in short term so temporary now i'm going to be walking you through i have an amazing free resource in my re resource library it's not just a bare bones budget template it's an actual worksheet and i'm going to show you that worksheet right now so this is my bare bones budget worksheet inside of my free resource library i'll put a link to that in description of my video the reason having a worksheet is so helpful is because essentially you have three options when you are dealing with your spending or expenses you can keep that expense you can cut it and you can lower it these are the three decisions you need to make with your current expenses right now so the first step is listing out everything that you are spending your money on right now so for me you're actually looking at my real expenses minus my thinking funds and the things that i knew and we'll be talking about things that to cut but the things that i knew not to include in my bare bones budget so you have essentially my fixed expenses my month to month regular recurring bills and then things like food transportation pets property taxes and home insurance now we'll be going into like i said the things that cut keep and lower so the first thing you need to do is write that down with their due date and their current bill amount what you are currently spending on those expenses then you need to make a decision to keep cut or lower now what i did on the worksheet is i assigned highlighter or sharpie or pen colors to those three different things if you see it on my worksheet in green i'm lowering it if it's in red i'm cutting it if it's in blue i'm keeping it here's what you need to do for each expense you're going to choose keep cutter lower now my garbage bill every single month i decided to lower currently i have county garbage pickup but i can can significantly lower that cost by taking my garbage to the dump myself and i know that to take my garbage to the dump once every week would cost me probably no more than 12 to 15 dollars we wouldn't even have that much weight in garbage when we took it so it wouldn't be that much so 73 is the amount that i would save my new bill amount would be 12 and my old bill amount would be 85 85 minus 12 equals the 73. so let's just walk through some of these hulu i would get rid of it you can see i have it marked here in red to cut out my new bill amount would be zero which means i'm saving the total bill seven dollars i'm going to be able to cut out of my budget which is fantastic same with spotify i made a personal decision to keep pet insurance i want to be able to take care of my animals if something were to happen so i'm going to leave that i'm not saving anything in my budget by keeping that tod investment so i have automatic investment contributions happening inside of my budget i would get rid of them any type of automatic savings or investing contributions that are outside of necessity should be cut remember this is only temporary so i do a hundred dollars a month for that investment if i cut it out i bring the bill amount down to zero i'm saving myself a hundred dollars peloton get rid of it my 529 investment get rid of it avista utilities now i decided to keep this this is one of those things that you could also decide to lower it is possible to lower your utilities why didn't i why did i just say to keep this it's because i'm already on comfort level billing with my utilities that just means that i am getting billed the average that i use throughout the year so i live in washington state the winter months my utility bill spikes because i'm heating my home more in the summer my house stays fairly cool without the ac so my low my bill is lower so i do an average through my yearly usage and it average averages out every month so i decided to keep that dental insurance i'm going to keep home security you will have to make personal decisions based on now is home security a necessity no so i decided to cut it however though not being able to sleep at night because you don't feel secure in your home that's another story so some people might want to keep this but i'm going to cut it and i'm going to save 55 for cutting that bill i have two different types of budgets for my pets i have a chewy subscription that pays for litter cat food and dog food right now i get my dog because he has significant skin allergies he's on very expensive food and i get him the best food so i know i could probably lower that by about 50 bucks so i i decided to lower that bill to 135 i know i could probably find a cheaper alternative for his dog food so you would go through each one of these things now let's talk about the things that you would cut no clothes no eating out you can see in my food budget i typically spend about 450 a month i know i can lower that to 400 a month so no eating out entertainment and any entertainment subscriptions you would cut those save automatic savings automatic investment contributions outside of employer match should be cut so all the things that i cut are here in red so my dog's treats cut my youtube tv my automatic investments netflix my home security peloton my peloton subscription those are cut the things that you can lower in your expenses on your bare bones budget would be things like cable so i don't have cable i have youtube tv now if it were me and if i was in crisis mode not an intense goal mode i would cut cable altogether phone you're not showing phone on my bills because my phone is actually a business expense so it goes through my business budget so that's why you're not seeing it on my personal budget here insurance you have the possibility to lower insurance i would call your insurance provider and let them know hey can i get my premium lowered food is another one to look at to lower and also transportation now i own my car outright so when you're seeing transportation on this line this is strictly for gas for my vehicle i know i don't spend i don't need to spend 150 a month on gas i just don't drive that much so i i put to lower that to 130 saving myself 20 the things that are absolutely i believe are keeps in your bare bones budget are retirement contributions up to that employer match if you have an employer um sponsored account now this isn't on my bare bones budget that that's actually on my business budget but if you have an employer sponsored retirement account that offers you a match if you can i would contribute up to that employer match medical insurance which you see here 326 i decided to keep minimum credit card or debt payments is also a keep you don't want to put yourself in delinquency or be charged on late fees so you want to be current on your debts now i'm debt free this is why you're not seeing any type of debts on my bare bones budget and i'm also mortgage free i don't i own my house outright so but i do have property taxes and home insurance that i put a little bit every month into a savings account to pay for those things yearly i have to keep that in my bare bones budget because i need to pay that in order to keep my house and to live here so even though i don't have a mortgage i still have 634 dollars worth of expenses towards my home that i do need to pay so keep retirement match medical insurance and minimum any type of minimum debt payment should be included in your bare bones budget but essentially in reality you deem what's a necessity in your life of course food transportation housing insurance and the things that i had mentioned here's the cool thing about this worksheet is before we made any changes my regular budget in order to continue the lifestyle i was living and to do i think the bare minimum of that i spend four thousand one hundred and eighty three dollars i actually end up spending more my budget because in this i'm not including my sinking funds sinking funds are just savings goals that i have in place that i contribute to a little bit every single month so 4183 when we write down our new bill amount i went from 4183 to 2304 that's nearly in half i'm saving 1 879 you can see that here my amount saved for making these changes and getting down to a bare bones budget is 1 879 that's a huge help if you're in crisis mode or if you're in intense goal mode that's 1879 dollars you could be throwing towards a financial goal that you're trying to reach very quickly or if you're in crisis mode and you're making the decision to put food on the table or pay your mortgage or rent payment that's why i really like working through the bare bones budget worksheet is because it gives you the chance to think about keep cut or lower remember start with writing out all of your expenses that you are currently spending your money on today that includes your fixed expenses your variable expenses savings goals contributions any debt payments all of it needs to be written down so you can then go line by line and to make the three decisions keep cut or lower on your bare bones budget worksheet you can then see how much you are going to save i always kind of like to do this too because it kind of motivates me to be like man if i can get down to 1879 on a bare bones crisis mode budget then i might have some wiggle room to possibly look at cutting out some fixed expenses or variable expenses that i'm currently paying so i can reach my goals fast enough it's very motivational to know where you're starting at and what you can save within your current budget that you are working right now so that's how you fill out the bare bones budget worksheet inside my free resource library i feel like this is a very helpful tool if you just want to analyze where you are and where you need or could be if you absolutely needed to one significant difference i want to talk about between crisis mode and intense savings goal or intense goal mode is with the intense goal mode you really are able to make the decision to keep some expenses in your life for example if i was in crisis mode meaning i had a substantial loss of income i would decide to cut out all entertainment in my life remember temporarily but if i was in intense goal mode right now i have hulu spotify and youtube tv and netflix yes i have four so if i was in crisis mode i'd get rid of all four if i was in intense gold mode i might say well my favorite out of all those is netflix so i'm just gonna keep that one and cut out the other three see the difference getting completely rid of all of them versus making that decision and and honestly going through your trade-offs of how fast do i really want to hit this goal versus what am i willing to give up right now in my budget and what am i not that's the difference between those two so and i think too when you when you are coming to that place and season that temporary season in your life knowing the mode that you're you that you're in i think is really obvious i mean obviously you have a pay cut you're going to want to do the crisis mode versus just knowing you want to hit a goal faster so this is really helpful if you are asking yourself right now i need to get my expenses down very quickly what do i do start with the bare bones budget or temporary budget worksheet if you found this video helpful please like it and don't forget to subscribe why i like to call that okay am i on so you're taking out all come on come on [Music]

Channel: The Budget Mom

Views: 58,031

Rating: 4.9634247 out of 5

Keywords: the budget mom, budget with me low income, bare bones budget, how to budget, dave ramsey mutual funds, how to budget and save money, how to budget on low income, how to budget for beginners, budgeting tips and tricks, budgeting tips for low income, budgeting tips for beginners, low income budget, how to budget and save money on a small income, how to budget your money on a low income, saving money hacks, how to live on low income budget, fixed expenses, lower expenses

Id: 4BN-kF_xbO0

Length: 17min 9sec (1029 seconds)

Published: Sat Mar 20 2021