How To Create Your First Bare Bones Budget: FREE Calculator

I really like the term Bare Bones Budget, even if it sounds a little bit morbid. But, it embodies that idea of living way below your means to achieve your financial goals. For us that is a 2-year long parental leave. For you, it may be the same or something else. The goal doesn’t really matter. What matters is that you commit to that budget – temporarily.

In this post I’ll show you what a bone budget actually is and how you can make your first bare bones budget with our free calculator in 7 simple steps.

Therefore, we talk about what your bare bones necessities are and how to approach even those with frugality. Once you know that you can calculate your emergency fund based on your bare bones budget. That is a very important step for your personal finances. In addition, I want you to know how to deal with your debt payments while living bare bones and what to do with your credit cards. Last, I share with you my lessons learned and best tips on how to actually stick to a bare bones budget if you have kids.
I will present you the Bare Bones Budget as one of the 7 money-saving challenges structured as follows:

1. What to expect
2. How much time you will need
3. How much it will suck
4. How often to do it
5. My lessons learned

What to expect

That money-saving challenge will skyrocket your savings to the next level. It’s by far the hardest savings challenge my husband and I have ever done. But, it’s also the money-saving challenge that saved us the most. Imagine how it would feel like if you can save hundreds of Euros if not 1.000+ Euro in just 1 month towards your financial goal. If you give the temporary “Bare Bones Budget” challenge a try it will really open up a new world of saving money for you.

What is a Bare Bones Budget?

A Bare Bones Budget means that you spend your money only on the bare bones in your budget. The bare bones necessities in a budget is everything you absolutely NEED to spend money on. An example is housing and all the other financial obligations and fixed costs you have like childcare or car payments. I like to call that money to survive (although one can rightly argue about car payments). Every other spending category in a budget is money you consume on what you WANT to have. Any extra spending like going out or a gym membership are non-essential expenses.

Understanding that separation of money you NEED to survive and WANT to consume is a big thing. Especially when you look at the ratio between both. I can highly recommend calculating the sum of your money to survive and to consume and to compare it. I’ll show you how you can do this easily later on using our free calculator.

What are bare bones necessities?

How much do you spend every month on your bare bones necessities from that picture above? Looking at your own numbers within your monthly budget will be eye-opening. Because seeing your real numbers, your real expenses in front of your eyes will do something with you. It will empower you to make a very important mindset shift you will benefit from for the rest of your (financial) life. If you realize that you spend 1.200+ Euro on food – as we used to a long time ago for just the two of us – it’s time for the next step.

Bare bones expenses and frugality

When living on such a type of budget you approach all spending with frugality. You challenge yourself to cover only the bare necessities for every expense area – the absolute minimum you truly NEED. For example, when grocery shopping you don’t buy convenient food or any sort of pre-packaged, pre-cooked food. You rather put ingredients in your shopping cart to cook your meals at home. There are so many resources out there on how to do this within minutes. You may also want to consider implementing elements of the pantry challenge as one of the 7 money-saving challenges we looked at.

Generally, the budget category food will be the one you can save most if approached with frugality. That doesn’t mean to eat cheap. It means to figure out ways how to eat healthier while spending less. I can tell you first-hand that it’s possible, especially as a family. We used to spend well over 1.200 Euro per month on food for just 2 persons. And we didn’t even eat healthy but a lot of fast food. Today, we spend 200-600 Euro per month on 90 % wholesome food as a family of 4. We have never eaten that healthy.

Here are some tips to save on seemingly little everyday expenses for food:

1. Stop Couponing. I have been a big couponer just a couple of years ago. I can tell first-hand that you will not only stock up on things you would otherwise not buy. You will also buy more than you can consume which will lead to food waste sometimes. But even more importantly, you will eat unhealthy and low-nutrient.
2. Stop eating out. I know it’s convenient to just go out and be served but simply stop it.
3. Brew your coffee at home. The Latte Factor explains how making a few easy shifts in one‘s everyday routine – like stop buying a coffee every morning – will make you richer.
4. Shop seasonally at farmer’s markets. Food prices have been through the roof recently. Even in the summer a pack of fresh strawberries is 6-9 Euro at our local supermarkets. At my farmer’s market I buy that for 3 Euro as I don’t care that they don’t look perfect.
5. Stick to your grocery list. That’s a hard one, I know! I share with you all my wisdom in the blog post Impulse Buying: Its Roots & How To Overcome 3 Main Triggers.
6. Go shopping every 10-14 days. That will lower your gasoline and grocery bill. I created a list of what we always need to have on hand at home. I then shop only that. We first eat the easily perishable food. In our last days we’ll mostly have apples, bananas, kohlrabi, carrots and pickled veggies like cucumbers for example. It took me years to figure out that hack but it works! And you will have less food waste.
7. Lower your utility bill. Cooking at home needs electricity and water. I leave a big measuring cup in my sink to collect the water I use to wash my food to then cook eggs with it. This is only one tiny hack to get that utility bill down. What else could you do? Turning off the lights when leaving the room (not only in the kitchen)? Unplug unused appliances like the coffee machine? How about getting rid of it and switching to our favorite new way to drink the most delicious coffee ever using the Chemex?

What about debt payments and credit cards?

Debt payments are part of your fixed expenses. So, they belong in your Bare Bones Budget. But, talk to your creditors about your debt repayment. Ask if they can lower your debt payments temporarily. This is very important. You don’t want to make minimum payments forever. You may want to do that as long as you live bare bones. But, financially it’s actually not a good idea to only make minimum payments towards your debt. So, if possible stick to your regular debt payments.

Credit cards are another thing. Are you using them strategically for travel hacking as I shared with you in the last post? If not, when was the last time you looked at your credit card statements? Do you know how much credit card debt you have? Neither? Then, consider taking a scissor and cutting your card in half. That’s a great way to not accumulate even more high-interest debt. Or you freeze your credit card temporarily. Yes, freeze – in real in your freezer. You can actually do that. You may want to do the same with your bank account but figuratively. If you don’t want to be as dramatic just put your cards away. Look at your bank statements and take out cash without going into the red. Then, simply live off your cash.

Calculate your emergency fund (based on your bare bones budget)

An emergency fund is your financial safety net. If you immediately need money to cover an emergency you simply take money from your fund. If people or pets depend on you that’s even more important. It protects you from taking on debt if unexpected things happen with your dependents like a health issue.

Some people decide to live bare bones temporarily to save up enough money for an emergency fund. But, you then do it backwards. Start with living bare bones first to figure out how much money you need to survive. I recommend adding a buffer – just in case. Then, you multiply that number by 3, 6 and 12 to know the amount of your 3-, 6- and 12-month emergency fund.

Now, you live on a Bare Bones Budget as long as you need to fully fund your one-year emergency fund. If this is impossible for you as you’re living paycheck to paycheck, maybe you could somehow earn a bit more money through a side hustle. The general recommendation is to then first focus on a so-called starter emergency fund of 1.000 Euro. Then, work your way up. Ideally you put your money into a high-yield savings account where you earn 2-4+ % interest rates.

How to create your Bare Bones Budget

Your Bare Bones Calculator

Initially, I have created this Bare Bones Calculator simply for myself. I wanted to make it through a period of time (2 years) with less income and higher expenses (due to my parental leave) after giving birth to my second daughter. I was so successful at it that we were even able to still put money aside each month. Despite all-time high inflation and prices that have gone through the roof everywhere (our daycare costs doubled!).

I’d love you to experience such a level of financial control too. So, Marc has taken my chaotic spreadsheet and created a really cool, comprehensive and powerful financial tool. Our goal is to empower other families living their dream life on a budget they can afford. See how you too can profit from your own version of the Bare Bones Budget Calculator designed to help you thrive even in tough times financially speaking. Or when facing less monthly income and eventually higher expenses like us. We reveal our Bare Bones Budget example with real numbers in this calculator too. But, if you just want to get started with creating your first Bare Bones Budget, get your simple Bare Bones Budget Calculator for free!

7 steps to your first Bare Bones Budget

You can use the following 7 steps to set yourself up for success when making and living by your first Bare Bones Budget:

1. Determine a set amount of time
2. Choose the time period within one year wisely
3. Figure out exactly what you spend
4. Identify the expenses you NEED to keep
5. Find frugal ways on how to lower bare bones expenses
6. Determine an exit strategy
7. Track your spending and evaluate those

First, you need to determine a set amount of time like 7 or 30 days to live bare bones. You do so out of choice, not out of necessity. This is very important. It is a huge privilege. Simply realizing this will be worth doing that challenge. Therefore, people often choose 1 month.

Also, choose the time period within one year wisely. Vacation time might not be the best period to live bare bones. But, it depends on your situation. If you want to challenge yourself a lot or to save a lot fast, vacation time or even Christmas might be just perfect.

Next you need to figure out exactly what you spend. Therefore, start tracking what you spend. There are a ton of free resources out to help you there like The Budget Mom. If you’ve never done this before stay tuned as Marc is about to publish an article series on exactly how to start tracking and budgeting as a couple.

We practice tracking and budgeting our money for > 10 years now and have learned one thing or two along the way. The result is that we can look back at a successful years-long savings and investing journey to fund our family‘s dream of early retirement. That is our big financial goal. We’re about to share everything in a F.I.R.E. workbook to come, especially designed for European families.

The next step is to look at all spending categories. Identify the expenses you NEED to keep. Ask yourself the following questions. What are your must-have expenses such as bills and expenses you cannot cut out like food? What is just a nice-to-have or even a luxury you could live without, at least temporarily? You then have the choice to keep an expense within your budget or to cut it out. A way in-between would be to reduce that expense. We talk about that in the after next step.

When you talk with your partner be open-minded to uncomfortable conversations. When we first talked with each other an old issue of dispute was on the table between the two of us: our transportation costs. We own a car. That isn’t something we really NEED to survive. But a bus ticket is because it takes me to work where I need to go. A car does too but the point is that a car is simply a luxury. It is not part of the basic necessities someone needs. My husband always disagrees with me. I must admit that it’s really an issue for many people.

However, once you know what you spend it’s time to find creative ways on how to lower even your bare bones expenses by applying frugality. For our car problem we found the following solution. We will only drive our car when we absolutely need to. For example, my husband’s commute to work is twice as long with public transportation than by car. As he only goes to the office now and then he takes the car. When I go shopping at farmers markets that are far away I take the car too. I only do that twice a month. That is a new strategy to lower our food bill and it works great. For everything else like running errands or taking the kids to daycare we use our e-bikes or simply walk as our home town is small.

Last, you need to determine an exit strategy for everyday life. When you try to live bare bones you will be confronted with many temptations to spend money. And your kids might too. Show them to not relent when it comes to your impulses. That, by far, outweighs every hassle I had during that time. I share my journey on How To Stop Impulse Buying And Save Money In 2 Simple Steps. Hopefully, the strategies are as valuable for you.

Now, you’re best prepared to start your money-saving challenge. As you go it’s important to keep track of your spending and evaluate those. Nothing is more important than tracking your spending. I can’t stress this enough as it’s just true. Evaluate how you spend your money during that bare bones challenge every 2-3 days but at least once a week. That’s how you can quickly reveal if you’re on track with how you planned out your budget. This step might be the hardest. That’s because chances are high you’re not there yet. You may lack the financial discipline you need to succeed with living bare bones. Don’t stress out too much about that. You will get there.

Tips on how to actually stick to a Bare Bones Budget

What if something breaks unexpectedly?

We first experimented to live on a bare bones budget more accidentally. Of course, our cooktop broke. We were in the middle of the Corona crisis and had a hard lockdown. Even if we would have wanted to spend money on a new cooktop, we had no one to install it. And, we couldn’t fix it on our own by getting on YouTube and watching some tutorials despite Marc’s technical affinity. So, we searched for someone within our circle of friends to help us.

You will be surprised how likely it is that you get help for free as someone always knows someone else. We continued cooking with a half broken, half intact cooktop after some instructions. We lived this way for months until someone installed our newly bought cooktop. That gave us time to save up money without straining our budget too much.

That approach transformed our spending habits for the long-term for the better. And it can be that way for you too. In earlier times we simply would have spent more money in that month as it was “an exception”. Today, I know every month there is another exception if you let it happen.

What if an unexpected invitation pops up?

If your kid’s friends got an invitation to an expensive activity, what do you do? Encourage them to think of an alternative way to have a great time with their friends through a re-invitation. Help your kids to organize a garden party. Create something special like a DIY fireplace, grilled marshmallows and scary stories from masked daddy.

What can help you is talking openly to your family, friends and especially to the parents of your kid’s friends. Maybe even cancel planned activities and do a re-invitation as mentioned. There is NO reason to feel ashamed about that. In contrary, be proud of your brave financial decisions. Of taking action towards your financial goals by living bare bones temporarily to achieve them.

How much time you will need

There are many other terms for that money challenge such as buy nothing month or no spend month as most people who are tackling that challenge, do it for one month. Here’s why. We decided to go for a whole month of “Bone Budget” because of two reasons.

First, we considered ourselves already experienced savers and looked for a real challenge to learn new things on our money-saving journey. Second, we calculated the amount we would save. How much would that be in your case? If living on a bare bones budget for a whole month would allow you to save enough to already meet your financial goal behind, simply go for it. Also, your expenses per week may vary during the weeks of a month.

How much it will suck

You might ask, why drain your family so hard? The reality is: You will discover the exact opposite. Not only will you start to question your spending behavior. You will also create new awesome habits as a family while spending less money. I talk about that down below in more detail when I share my lessons learned.

How often to do it

That depends on how much experience you already have with saving money. If you consider yourself a beginner, try to live off a “Bone Budget” for 7 tiny days. Sometimes a week is enough to profit from all the money lessons you learned. If you’re an already experienced saver try a Bone Budget month.

My lessons learned

My lessons learned with living on the bare bones financially actually start far back in the past. When I was a student I got a bursary. That was great but limited me financially a lot as you might not expect. But it did. That’s because I was not allowed to earn additional money through a job. Instead, I should fully concentrate on my education and not on earning money. It paid off at the end and doubled my income to a level that I did not expect before.

But, my bursary was only about 660 Euros per month at that time. Half of what I was used to earn in a part-time job as a working student at a big company. I had to adjust a lot. So, I decided to share a flat with another student to lower my housing costs. I still remember going to the cheapest possible grocery store buying also the cheapest offers such as apples, carrots and some rice. That actually tastes pretty good if mixed up with butter in a pot. My budget was tight and even if so, I had been able to live bare bones for years. So why wouldn’t I be able to live off that budget for one tiny month with my family?

You see, spending less money does not mean to limit your family or kids. In contrary. I found that every time when I spend less I add more value or more quality time into my life. I am forced to ask myself what truly matters to me and what is a non-negotiable. To me that’s everything regarding my kid’s education but certainly not my kid’s clothing. I want to empower my kids to focus more on each other or themselves than on being entertained through something else. For you, it might be something else. However, the two of us will have the same 5 core lessons learned from that money-saving challenge.

1. By aligning how you spend your money based on what is important to you, you will save money beyond that challenge.
2. By cutting out the non-essentials from your budget temporarily you might cut out one or two expenses forever. So, you’ll save more money for the long-term.
3. You will start questioning your spending habits for every budgeting category as you need to engage with all. That will reveal unhealthy money habits you then may stop.
4. Even if you think there is nothing left to be cut from your budget, you will discover at least one more expense to cut out completely. Promised.
5. If including your kids in this challenge they too will incorporate living within their means. You will teach them healthy financial habits that will save you money long-term. I was surprised how much my daughter understands at the age of 4. I share with you even How I Teach My Kids To Invest For Financial Independence.

I hope you walk away today with at least one new idea to improve your personal financial journey (towards F.I.R.E.). I’d love to show you some more in the next post. To not miss a new release you can apply to become a part of the community down below in the green footer.

Now, I’d love to hear from you: Do you want me to go deeper into a specific topic? Let me know in the comments below!

Title Image Source: Ryan Holloway auf Unsplash