A bare bones budget is one that focuses only on essential expenses. These include the basics of living, including food, housing, utilities, and transportation. They also include health insurance and medications. When you have a bare bones budget, you’ll be able to adjust your spending habits and make massive headway toward your financial goals.
Generally, a bare bones budget will be temporary, so it’s not a good idea to follow this method indefinitely. However, it’s a great way to increase your savings rate yearly and figure out a minimum rainy day fund. This budget will keep you out of debt and help you reach your financial freedom faster.
A bare bones budget can be used as a hard reset if you’re prone to overspending. By cutting out everything but the necessities, you can make gradual improvements towards your financial goal while gaining awareness of your priorities. An accountability group can also help you with this process. Another way to stay on track is to create a savings challenge.
Debt can be a big obstacle, as high interest debt will make it more difficult to reach your goals. As such, paying down your debt should be your top priority. A bare bones budget allows you to temporarily cut back on your expenses and funnel the extra money toward paying down your debts.