Budgets may not be exciting, but done correctly they’re extremely valuable. By working out a “needs only” budget you can see what money you need to survive, so you can prepare for an emergency or sudden lifestyle change.
Budgets tend to include a number of non-essential things, and that’s OK: One of the reasons personal budgets often fail is because extras like entertainment aren’t included. The developers of mvelopes, an budgeting service we’ve mentioned before, suggest that you should also determine the bare minimum you need to survive, just in case. This will help you to adjust to a loss of or drop in income, medical emergencies, and other events.
A Needs Only Budget is a great way to have a plan or a roadmap of what action steps are needed in order to adjust to your new financial reality.
Instead of panicking, you can simply pull out your Needs Only Budget, go though the list of items you’ve already decided to eliminate ahead of time (in case something were to happen) and you can spend the rest of your time looking for another job, considering other options like running a small home business (daycare, crafts, etc.) or simply enjoying some much needed time off.
Spend a little time working out what is actually needed, and you may also spot opportunities to cut back in some areas and save money today. Think of it as an emergency plan. You may never need it, but it’s there in case the worst happens.
Do You Have a Needs Only Budget? [mvelopes]
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