We are all living a different lifestyle, some spending more than others, with a monthly budget that is made of several categories:
Absolute necessities, needs, wants, savings and long term financial plans, debt reduction and credit cards payments.
My question today is: if disaster struck tomorrow, what would be your absolute survival budget?
You are probably wondering about the difference between an absolute necessity and a need. Glad you asked.
An absolute necessity is a roof over your head. A need is paying your mortgage. In case of financial hardship, you may have to sell your house, and get a smaller one. For one or two people, let’s say a studio flat is an absolute necessity. For a family of four, it would be a two bedrooms, with the kids sharing a room.
What if you are underwater with your mortgage? In this case it may be cheaper to keep the expensive house you bought instead of taking your loss. I think you get the picture. Absolute necessities is a bare bones budget. Food is an absolute necessity. But we are talking rice, noodles, eggs and enough calories to keep you going. No name brand, meat or processed foods.
And so on. We all know we are supposed to live on a budget. But on a survivor’s budget, things are different. There is no more cellphone plan, no more car, no more buying clothes and no more savings. Just the minimum payments on your debt, and the basics for housing and food. You don’t need a car to go to work, even if work is far away and you live in a remote area. You can walk, cycle, take the bus or carpool. That is how low the survival mode budget is.
Do the math, add it all up. Remember to include only things you can’t live without. Cable subscriptions and tech gadgets aren’t allowed in there. Apart from the minimum payment on your credit cards, chances are you won’t be able to save or contribute to retirement. Or set aside anything.
We are talking tremendous financial disaster. How long could you survive on your bare bones budget?
My grocery bill for two is more than a month’s salary here. Yet local people are able to eat, and are generally feeding more than two people on that money. Actually, it is about all they do with their money. They build a house from a little bit of this and another bit of that on a land they don’t own, pay $2 a month for water and another $10 for electricity, then all the rest goes to food, soap bars and cleaning supplies, there isn’t much room for anything else.
I could reduce my grocery bill to that level if I really needed to. It would probably lead to a quite unhealthy diet with not enough proteins but you have to do what you have to do if you can’t make ends meet.
I am not advising that you go into survival mode today, far from it. Actually I hope you will NEVER have to get that far. But it is good to know what your absolute minimum budget is. Why?
Your emergency fund may cover 3 months of normal living expenses, and 8 months of bare bones budget. Which is comforting while you beef it up a bit more.
Say you make $2,000 each, and your normal spending is $3,500. If bare bones is $1,000, you may realize that on one salary, or $2,000, you could live quite well, and have one spouse stay at home.
You may accept a lower paying position to improve your quality of life, work closer to home or shorter hours, and yet still know that there is a bit of fat on your budget.
The perspective of life’s disasters will be less daunting. If you lose your job, you don’t need to replace 100% of your income, if you are able to live on 30% for a while.
Like I said before, this survival mode budget has a lot of drawbacks.
- You will stop contributing to retirement
- You will only make minimum payments on your debt and it will take forever times a million to pay it.
- You will have difficult housing conditions and an unbalanced food diet.
- Replacing things like clothes and household items that you will have to do at some point will be a struggle.
It is just a small mental exercise to see how well you can weather a financial storm, and put into perspective all the things you do have today and take for granted. My survival budget is mostly food and gas to cook since my house is paid for, so I would need about $150 per month. $10 for gas, $100 for food, $10 for electricity just to keep the fridge up and pump water up to the house, $10 to take the bus to the supermarket and $20 to replace something broken. Over the past few months, I have spent about six years of that budget on house improvements and living costs. You definitely get some perspective.
What do you think your survival budget is? How far is your regular budget from that number?
Latest posts by Pauline (Posts)
- Travel on a budget in 2019 - January 23, 2019
- Should You Buy Cheap Clothes? These 5 Surprising Reasons Will Convince You - January 18, 2019
- From the Classical to The Classics- A Journey Through Greece - January 17, 2019
- What does it take to buy a house? - January 9, 2019
- How in the World Can I Pay Off My Debt? - December 19, 2018