Three buckets to rule them all

The Barefoot Investor gets a lot of slack for being everyone’s go to Get-Your-Life-Together book. But there are valuable lessons to be learned from Scott Pape’s ‘bucket’ budgeting approach.  

If you’re someone who struggles to keep up with a budget spreadsheet or are simply looking for a simple way to split up your budget, the bucket approach can help you.  

The Three Buckets 
Pape’s budgeting method involves splitting income into three categories: 

• Blow (Everyday Bucket) 

• Mojo (Savings Bucket) 

• Grow (Investment Bucket) 

 
Step One: Split your income in your Everyday Bucket 
This is where you run your day-to-day life. Pay bills, save for holidays, and spend money on things that you enjoying doing but don’t necessarily need.  

All of your income goes through these accounts! 

Account 1: Daily Expenses  

• Use this account to pay for bills, utilities, groceries, etc. Anything that that comprises everyday spending.  

• This should receive 60% of your income. 

Account 2: Fun Spending  

• Use this account to indulge your coin collecting, amateur bull fighting, or love of fancy sushi.  

• This should receive 10% of your income. 

Account 3: Debt Reducer 

• Use this account to save for non-regular bills like medical expenses, repairs, or maintenance.  

• This account should receive 20% of your income.  

Account 4: Adventures  

• Use this account to plan for big goals, like holidays or upgrading your car. 

• This should receive 10% of your income.  

 
Savings Bucket 
Once you’ve split up your income, any extra money from your Debt Reducer account goes here.  

It’s recommended that you start this account with $2,000. Then, keep saving until you have around three to six months of income covered.  
 
Account 5: Emergency  

• Use this account to prepare for large, unexpected expenses such as losing your job or your car being totalled.  

• This account should start with $2,000 and be funded by overflow from your Debt Reducer account.  

 
Investment Bucket 
 
Your investment bucket can comprise any number of long-term investments. The point is, you’re investing in your future.  
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This bucket is funded with overflow from the Savings Bucket. You can invest in something low-risk like a high-interest savings account, or in something with higher growth potential, such as a managed fund. 
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You could also use this to add extra contributions to your superannuation.  
 
If you have any questions about budgeting your income, you’re welcome to reach out to our office to learn more.  ​