Learn How To Budget With The 5 Bucket Money Management Method

Learn How To Budget With The 5 Bucket Money Management Method

Budgeting is imperative for anyone to keep track of what’s going out versus what’s coming in. Ideally, having money left over leaves room for one’s ability to save, invest or pay off debt. Every dollar you bring in can contribute to your financial future, meaning it’s important to have an understanding of your expenses, especially non-essential spending, which creates poor spending habits.

Bucket #1: Necessities/Bills 

The first bucket is called “Necessities/Bills Bucket.” This bucket is considered first priority because all of your regular and reoccurring bills and expenses come from this bucket. This bucket is most important because it also represents money that isn’t yours. In other words, this account could also be known as a reduction to your income. However, moving forward, you will not have to worry with the amounts coming from one single account.

Bucket #2: Emergency/Savings

The second bucket is called “Emergency/Savings Bucket.” This bucket is the least favorite, however, it’s a must to take care of it especially if it includes loans such as personal, student, car, or credit card debt. No debt allows for additional contribution toward other buckets.

Bucket #3: Fun/Spending

The third bucket is the “Fun/Spending Bucket.” This is the bucket most look forward to, receiving permission to spend this amount guilt free. This bucket allows you to interact the most with your money, while your other cash flow works on the backend.

Bucket #4: Learning

The fourth bucket is the “Learning Bucket.” This amount is used to invest in your knowledge or education to start a business or future ventures down the line. This bucket ensures that you get to where you want to go and do in life. This bucket allows true freedom.

Bucket #5: Investment

The final bucket is the “Investment Bucket.” This bucket will ensure your financial freedom exists in the long run. This bucket will grow as much as possible so that once you do stop working, you will continue to have an income that provides you a fulfilled life.

Now that you know the Five Buckets, I challenge you to go out and set them up. You can now live life without thinking about your money every year.


For more information on how to increase your income from our Financial Correspondent, check out her IG @theinvesther_


Feature Image via Rebel Financial

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