Snails? Who invited snails to this party?
Money. Like those escargots.

Money. It’s a slippery little sucker. When that paycheck hits the account, it’s all too easy to blow it in a matter of days … or hours. It can disappear without us knowing where it’s gone.

Love it or hate it, it’s important to know where the bucks are going, and to put some thought into planning.

Enter the dreaded B word … Budgeting … Blergh.

Nobody wants to build a spreadsheet entering line by line inputs and keeping track all the time. Ditto for apps with endless lists of numbers and charts on your phone. Too much detail, too much work.

So we prefer to think in buckets.

Whether you’re wealthy or have sweaty palms from your credit card bill, bucketing is a super simple way to plan your money. And it’s easy to start now.

There are just three buckets: #1 for your essentials, #2 for your savings, and #3 for your fun!

Bucket #1: Essentials a.k.a. Predestined Costs

These are your costs you can’t really get away from. They’re often pre-promised and related to your basics, like ya know, good ol’ food 🍜 and shelter 🏡. The rule of thumb is that essentials can account for up to 50% of your paycheck.

They include things like:

  • Rent or your mortgage
  • Bills
  • Health insurance
  • Petrol or public transport
  • Groceries

Don’t forget the lumpier costs that can blindside you, like your annual car insurance or tax bills.

You can cut back essentials by moving to a smaller place, turning off the AC 💨, and eating less of that delicious French cheese 🧀. At any rate, try to think of this bucket as maxing out at 50%. And the less you spend, the more you have for the next two buckets!

Bucket #2. Savings a.k.a Future Stockpile

This is all about Future You 🙋🏻☀️. What do you want to be doing in six months, three years, or ten? Once you name this goal/s, you’ll be on the way to crushing them.

This bucket should account for at least 20% of your paycheck.

It can include:

  • Paying off debt. I’m going to keep hammering this one – if you have debt like personal loans or credit card debt, don’t even start thinking about stockpiling! You need to nail this first. Why? Because the interest costs are eye-wateringly expensive. If you have savings piling up while you have credit card debt, you’re adding water to a bucket that has a big hole in it.
  • Rainy day fund ☔️. This should have around six, yes, six months of your essential costs covered. Another way of putting it is at least three months of your total pay. You can put part or all of this into a high-interest savings account or term deposit, such that you can access it easily.
  • Other savings. Whether for a car, a house or a course you want to take 🚗🏚🎓. You can put this into shares and bonds, or other investments of course, depending on your goals and the risk you can accept.
  • Retirement funds/superannuation. If you’re a freelancer or entrepreneur, this is a must. Aim for minimum 10%. Pay Future You! If you’re salaried, what about extra contributions? Not only can this be tax effective, but the sad truth is that 9.5% of our salaries is likely to be insufficient for our retirements.

Bucket #3. Fun!

This is for your personal stuff. Your lifestyle. It’s also the area you should focus on the most, because it’s where you can make the biggest immediate changes.

Limit this bucket to 30% max, but little old me would challenge you to have fun today with 20%, and make tomorrow more fun by saving 30%!

It can include:

  • Eating out
  • Trips away
  • Hobbies, whether you’re a mad cook🍴 or lego-obsessed ⚙
  • General shenanigans + tomfoolery 🎉
Um, when did Cookie Monster get a smartphone?
We all know mad Cook-ie Monster’s hobby.

How to get bucketing

Btw, you don’t need to stick to these buckets to the decimal point as everyone’s circumstances differ. What I consider essential (Aldi Moser Roth almond chocolate) won’t be the same as what Sar considers essential, for example.

Remember, the more you can touch your money, the easier it is for it to slip through your fingers 🖐🏽. You can avoid this by creating a bucketing system:

  • Sweep across the 20-30% savings bucket of your paycheck on payday into a separate account
  • Sweep 50% of it into another account that has all your direct debits setup for your bills
  • If you have anything leftover from your spending bucket by next pay day, add it to your savings bucket! 🏆

Before you know it, you’ll be filling up those buckets 💦, and you’ll be ready to start thinking about putting your savings to work!

Do you have a money system 💰⚙? We’d love to hear about it. Leave us a note or message us at hello@carrots.money!

Note: This is for informational purposes only and is not personalised advice!


2 thoughts on “How to plan your income the smart way

  • I’d be interested to hear from people who use this system where they take money for things like haircuts, clothes, gym membership. From essentials or fun?

    • This is up to you, really! The bucket system is designed so you can determine what’s essential and what’s not. It’s a rule of thumb, not concrete parameters. For example, haircuts are essential, but highlights or streaks might be under fun. And gym membership might be essential to some people but not others. You could see how your buckets fall at the moment and tweak to see what works best for you. The savings one is most important!

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