Let’s be real, we all know how much I L-O-V-E a good budget. To me, a budget is your "say yes" plan for balancing expenses and income in order to slay your financial goals.
On the flip side, many folks don’t talk about the importance of having more than one budget -- one for “living your best life”... and the other for when it’s time to buckle down on spending.
And that’s when you're going to need to jump into superhero action and shift to what I call a “noodle budget.”
What's a Noodle Budget?
A noodle budget is your bare-bones budget that only includes necessities. It identifies the lowest amount of money you need monthly to survive (a.k.a your financial baseline).
I named it “noodle budget” after the infamous Ramen noodles (in the pack, not the restaurant) because they're one of the cheapest meals around. They only cost about 25 cents a pack! And sometimes, that is EXACTLY what you can afford.
Why You Need a "Noodle Budget"?
Because life happens.
You can't always predict when "hard times" are going to land in your lap. None of us can. Losing a job... a change in the family dynamic... a recession – these are all examples of times when you may need to activate a necessities-only budget.
Sometimes, it's not all doom and gloom. A noodle budget is also good to put in place when you want to make a temporary sacrifice to save some extra coins for future fun like vacations, a new home downpayment, or wedding expenses. You know, the good stuff!
Truth is… we never know when we're going to need to "drop down and get our noodle on girl!"
**If you're more of a visual learner, no worries! You can watch a video about noodle budgets on Facebook.**
How To Calculate Your Noodle Budget
There are two questions to ask yourself when creating your noodle budget: Do I need this expense to be healthy? Do I need this expense to be safe?
Knowing your noodle budget starts with knowing your regular budget.
*PAUSE: If you haven't already created your regular budget, order a copy of my book, the One-Week Budget, to help. I show you exactly how to make sense of your income and expenses to create a personalized money management system that works. Trust me, it's not a #1 Amazon, best-seller for nothing! Okay, let's continue...*
Let’s just say that your regular budget is $3,000 a month — that may mean that your noodle budget -without the frills- is $2000 monthly. (These numbers are just for illustration)
If the normal budget includes: rent, utilities, phone, cable, internet, transportation, car insurance, dining out, salon visits, and entertainment…
Then the noodle budget may only include: rent, utilities, phone,
cable, internet, transportation, car insurance, dining out, salon visits and entertainment.
Once you calculate what that dollar amount looks like, then you know exactly how much you need to make a month to keep yourself afloat.
In more extreme cases, particularly for those with little to no existing savings, a noodle budget might involve making some larger sacrifices. For me, this meant moving in with my family to avoid costly rent payments.
Noodle Budget Calculation Suggestions
Pay attention to all the extra expenses that add up in your budget and eliminate them (for now).
- Skip the nail and hair salons, skip restaurants and movie dates.
- Cancel subscriptions.
- Call companies to lower phone/internet bills.
- See if there are skills you can barter ex: If you babysit, will your friend help you with your nails?
You'll be surprised at how many expenses you are able to cut out of your monthly budget when you (temporarily) set aside unnecessary luxuries.
Even if you already have an emergency fund set for situations like this, cutting back on day-to-day spending will allow that cash reserve to stretch much further.
Noodle Budget PRO TIPS
- Calculate your noodle budget today! Things change quickly and it's important to be able to drop to your noodle budget immediately when you are faced with economic hardship.
- Try to save up at least six months' worth of your noodle budget. This isn't easy, but you will be happy you made the sacrifice if/when things get rough. It will give you plenty of time to get yourself together and OUT of noodle budget land...and back into regular life.
- Understand that a “noodle budget” is temporary. I’m not suggesting that you live a “no-frills” lifestyle for longer than you need to because I want you to enjoy life; however, sometimes you gotta make a short-term sacrifice for a long-term gain.
Do you know what your noodle budget "magic number" is now... and get my drift on what an important component it is to help you achieve long-term (financial) peace of mind?
Of course you do...
**If you need more resources, don't fret! I've shared some of my favorite noodle budget tips with CNBC, which may help drive home the main points!**
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