Prepare your Emergency Budget, or as I like to call it, Skeleton Budget.
Emergency preparedness has been on everyone’s mind over the past year. Something that is not typically talked about is an emergency budget. We have heard the statistics over and over again about how many people are not prepared for an emergency and don’t have enough cash to cover a small crisis.
What you don’t hear is how to live when something catastrophic happens in your life. That’s where the skeleton budget comes into play. It gives you the peace of mind to know exactly how much money you need to survive every month. It takes one more stress out of an already stressful moment.
An emergency budget is something to use during job loss, a pandemic, hospitalization or even when paying down debt. The skeleton budget is just how it sounds, it is a bare bones budget. Just enough money to survive and no fluff.
If you have never set up a Skeleton Budget have no worry, I am going to walk you through it.
To create your skeleton budget start with these tips.
1. List all your monthly bills from most important to least important and include the cost.
Grab a sheet of paper and write out all your bills. Start with is the most necessary. Mortgage/Rent is typically the most important bill; followed by utilities like water, power, etc. Don’t forget to list things like subscriptions, childcare, and insurance.
Now that you have finished your list it’s time to cross out the ones that are unnecessary. You probably don’t need those clothing subscriptions, monthly boxes with dog treats, your kid’s piano lesson or even your gym membership. The trips to the coffee shop or picking up a quick snack. Only keep the ones that are truly necessary in the case of an emergency.
2. Write down all other essential budget items.
Now we all know that food is not a want but a need. Maybe your normal food budget is $400 a month but when you are planning your emergency budget you need to think of the minimum you can live on. You don’t need to buy junk food; this is essentially a beans and rice budgeted amount. So instead of $400, your emergency budgeted amount may be $250. Do the same with other expenses. Don’t forget about your pets, household items, and gas.
3. Add up all your left over bills and essentials, this total is your monthly amount needed to stay afloat.
Take a look at the total amount, I challenge you to take a second look and trim any additional fat from your budget. Now that you have chosen what components are part of your emergency budget, you must add them all up. This number is the minimum amount of money you need to survive on. This number can help you determine exactly how much you need in your emergency fund.
Revise this budget yearly.
Now once you have finished your emergency budget, don’t forget to set a yearly calendar appointment to revise. Maybe you had to pay for childcare before but now your kids go to school; eliminating that cost. Or perhaps you have negotiated or swapped your phone bill down to a lower cost. Life is ever changing so it is important to update yearly.
This budget is to make the unknown just a little less scary. You aren’t relying on emotions when setting this budget up. You have a clear mind and are setting yourself up for success.
Print my skeleton budget printable for free.
