bare bones budget

Have you tired of living paycheck-to-paycheck, dealing with that relentless feeling that no matter how hard you work, you never move ahead? Or, maybe you’re on maternity leave and dealing with a significant pay cut for a few months. Or maybe you’re dealing with a spouse’s job loss or have lost some of your freelance or self-employment income. If so, it may be time to learn how to create a bare bones budget.

Even if you’re not currently on a bare bones budget, you may want to go ahead and write out what your essential budget would look like right now. If you lost your job, how much money would you have to pay each month to keep the lights on and food on the table?

Why do you want to know this figure even if you’re ripe with extra cash? For one thing, it helps you set your emergency fund target. Too often, people think an emergency fund should be three to six months of net income.

Though, in a true emergency, you’d likely be able to cut back your expenses — sometimes dramatically, so you want to set your emergency fund goal, at first, for three to six months’ worth of essential expenses.

Unless you only pay out essential expenses, you must know your bare-bones budget. Here’s how you figure that out:

How to Create a Bare Bones Budget

Start With the Four Walls

Here at Dough Roller, we’re not necessarily on board with everything Dave Ramsey preaches, but his four-wall concept for budgets is pretty solid. The four walls are the things you must pay for to keep living. As Dave Ramsey lists them, the four walls are food, shelter, clothing, and transportation.

Here’s the thing: your budget for your four walls may look different from my own. So, it would be best to consider how it would look to strip these essentials back to their minimums in your particular situation. Let’s do a quick case study of the four walls for my own family.

For my family, the four walls would include groceries, a mortgage payment, utility payments, one vehicle’s gas and expenses, a monthly bus pass, essential medical expenses, and basic clothing for myself, my husband, and our two kids. Dave Ramsey’s four walls don’t explicitly mention medical expenses, but certain medications must be filled monthly.

Those expenses would look something like this:

  • Groceries: $400/month
  • Mortgage (including property taxes and insurance): $1,730/month
  • Utilities: $150/month (average)
  • Car Maintenance, Insurance, and Registration: $150/month
  • Gas: $100/month
  • Bus Pass: $30/month
  • Basic Clothing: $50/month
  • Medical Expenses: $50/month
  • Total: $2,660

Our current budget doesn’t look much like this at all. We spend a bit more on convenience foods, but we could cut back if we had to. Our mortgage would stay the same, but we could be less comfortable saving on utilities. (i.e., My husband likes his air conditioning!)

Learn More: How to Earn Cash Back on Groceries

We currently have two cars, one with a monthly payment. But if the worst happened, we could sell that vehicle and use our paid-off vehicle for my husband, who must have a work vehicle. I could take the bus to and from work if I needed to. And our clothing doesn’t have to be very expensive, as my husband and I have fairly casual workplaces, and we buy most of our kids’ clothes secondhand, anyway.

Your four walls might come in much higher or lower than ours, depending on your situation. For instance, maybe you live in an area where walking or busing everywhere is possible. So, if you lost your job tomorrow, you could sell your vehicle and get by without it. Or maybe you must have two vehicles to get both spouses to and from work.

Or maybe you work in a highly formal environment requiring you to have dry-clean-only suits. If dressing this way is essential, budget for more expensive clothes and the costs of caring for them.

The key here is to think carefully about what you would have to pay in this situation if you were cutting your budget as much as possible.

Add in additional essentials

The four walls are a good starting place and should make up the bulk of your bare-bones budget, but you should also consider other close-to-essential expenses you may want to add to your budget. This might include some of the following items, depending on your circumstances:

  • Phone or cell phone service
  • Internet service (especially if you work remotely)
  • Coffee shops (if you rely on them for internet access rather than paying for home internet)
  • Home maintenance
  • Medical insurance
  • Additional insurance policies (such as life insurance)
  • Professional association fees
  • Daycare
  • School tuition
  • Haircuts
  • Toiletries
  • Pet care items
  • Cleaning supplies

Many of these expenses could be cut out, if not forever, at least for a long time. But some are pretty close to essential.

For our family, I’d count phone service, internet service, home maintenance, life insurance, daycare, pet items, toiletries, and health insurance among our essentials. Daycare is the largest of those expenses, but we can’t be a two-income family without daycare. If one of us lost a job, we’d want to maintain our spots at our local daycare or risk being unable to find daycare when we find a job again. Here’s what these expenses would look like stripped down and counted monthly:

  • Phone Service: $50/month (if we switched to a lower-cost provider)
  • Internet Service: $50/month
  • Home Maintenance: $50/month for basic upkeep
  • Life Insurance: $55/month (we wouldn’t want to lose this coverage!)
  • Daycare: $800/month (and that’s cheap!)
  • Pet Items: $30/month
  • Toiletries: $20/month
  • Health Insurance: $250/month
  • Total: $1,305

Health insurance is an iffy expense to include here, I think. It depends on why you’re calculating your bare-bones budget. Count your current health insurance costs to cut back on this budget to knock out debt. But if you’re looking at what would happen if you lost your job, consider how your job loss would possibly make available options like government-subsidized insurance.

Again, your next-to-essential expenses probably differ from mine, depending on your situation. The key is to think clearly about how much you would need for expenses like these should you need to cut your budget to the bone.

Steer clear of bankruptcy if you can

What about debt payments? You should include your minimum debt payments if calculating your bare-bones budget to set an emergency fund goal.

Related: How to Get Out of Debt… and Fast

But what if the point of this exercise is to cut your budget back so that you can get out of debt? In this case, you might look at your budget like this: First, pay essential expenses, then put everything else towards debt. In this case, your minimum debt payments (other than those like your mortgage that are part of your four walls) don’t need to factor in. You’ll just put whatever is left each month towards debt.

For me, long-term debts like my and my husband’s student loans would be part of our bare-bones budget. Even if we lost a job tomorrow, we’d do everything possible to pay these debts to avoid negative credit consequences. Minimum credit card or personal loan payments might also factor in for you.

So, if I add minimum student loan payments based on our current repayment plans, that’s $215 monthly.

Add it all together

So, if you want to know your bare-bones budget, add these three figures together. For my family, the total comes to $4,180. And again, some of the expenses I’ve included — such as toiletries and even debt payments — could be stripped or stretched for at least a short period.

With that figure, I could say that the first $4,180 of our monthly income goes toward essential expenses. Whatever is left over can go towards debt. Or I could calculate my emergency fund savings goal- somewhere between $12,540 and $25,080 for the standard three- to six-month expenses.

How to Use a Bare Bones Budget

So, how can you use this budget in your everyday life? You’ve got a couple of options:

  • Stick to it. To stick to this stripped-down budget (which I wouldn’t recommend doing for longer than you need to!), consider doing a cash budget. Pay your essential monthly expenses upfront, and then use cash for variable expenses like gas and groceries. Or use a budget app to ensure you stay within range on all these line-item expenses.
  • Guide by it. What if you want to use your bare-bones budget as a guide to make sure your spending doesn’t get too out of control in any one area? In this case, write down what you could live on each month, and then start tracking what you do live on.

For instance, say you could feed your family for $300 monthly, but you spend $600. It might be time to look at ways to cut back on grocery spending!

Or, say you could get by without a vehicle if you had to, but your car expenses total $1,000 per month. Is it worth continuing to pay that much for your car payment, maintenance, gas, and more? Or could you find a way to moderate that expense?

Learn More: 4 Budget Types and the Best Tools for Each

Ramsey says you should live on a bare-bones budget while getting out of debt. Sometimes, this is appropriate, especially if you can pay off a big debt in three or four months. However, sustaining this tight budget over the long haul is extremely difficult. Plus, it might defeat the purpose. The goal of managing your money is to give yourself more options and to enjoy life more, not to live like a miser who never enjoys anything!

Writing down your bare-bones budget is a good exercise, though you might not want actually to live on this budget unless you must. But it gives you a place to start when determining your monthly expenses.

A Few Budget Apps to Get You Started

If you’re struggling to create and follow through with a manual budget, you may need some help. If so, plenty of low-cost budgeting apps can help you succeed.



YNAB is one of the most popular budgeting apps available. It centers around Four Rules: 1) each dollar in your budget is assigned an expense category, 2) you will anticipate large, occasional expenses, 3) you’ll build flexibility into your budget, and 4) you’ll “age your money.”  Aging your money brings you to a point where you begin paying this month’s bills using money accumulated from the previous months. Once you reach that stage, you’ll move past the paycheck-to-paycheck cycle and gain greater control over your finances.

YNAB is available for a monthly fee of $14.99 or an annual payment of $99 (the equivalent of $8.33 per month).

Read our YNAB Review



Buxfer is one of the most comprehensive budgeting apps available. In addition to budgeting, it also offers forecasting, investment tracking, and retirement planning.

Engaging in international transactions or having foreign-based accounts is especially valuable. That’s because it can work with more than 100 currencies in over 150 countries. It uses a user-friendly question-and-answer format, making it easier for you to access any information you need to manage your finances better.

Buxfer offers three different plan levels:

PlanAnnual Cost Monthly Cost
Plus$3.99 / month$4.99 / month
Pro$4.99 / month$5.99 / month
Prime$9.99 / month$11.99 / month

Monarch Money

monarch money

Monarch Money starts by having you add all your financial accounts to the dashboard. That includes savings and checking accounts, investments and retirement accounts, loans, and credit cards. You can then set goals, and the app will help you to reach them.

Though it is not an investment service, Monarch Money will provide investment assistance by analyzing your accounts, helping you balance your allocations better, and project future valuations.

Monarch Money is available for a monthly fee of $14.99, or you can sign up for an annual plan at $99.99 – the equivalent of $8.33 per month. It all begins with a seven-day free trial. You can add unlimited household members to the app at no extra charge.

Read our Monarch Money Review

Frequently Asked Questions (FAQ)

How do you make a bare-bones budget?

A bare-bones budget centers on determining your essential living expenses, fully funding those, and then considering any extra income as subject to discretion. For example, you may allocate income above necessities for certain luxuries, savings, or debt paydown. If there is no discretionary income, you may need to consider developing one or more additional sources of income.

What are bare-bones expenses?

Bare-bones expenses are those you pay for categories that are required for survival. They include housing-related expenses, food, medical care, essential utilities (gas, electric, water and sewer, etc.), phone, and Internet connections.

What is the 50-30-20 rule?

50-30-20 is a budgeting method in which a percentage of your paycheck is allocated toward broad expense categories. With a strict application of the strategy, 50% of your income will go toward necessities. Those include housing, transportation, health insurance, food, and similar categories.

30% is allocated toward what might be loosely described as wants. Those are purchases for discretionary items, like vacations, cable TV, eating out, and entertainment. Finally, the remaining 20% goes toward savings categories. Those can include emergency savings, investments, retirement contributions, and the paydown of debts.

You can modify the percentages if you cannot implement a strict 50-30-20 format. For example, you might allocate 60% to necessities, 20% for free-spending, and 20% for savings. The flexibility of this strategy is one of its biggest advantages.


  • Abby Hayes

    Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University Purdue University Indianapolis, and lives with her husband and children in Indianapolis.