Best Buckets To Help Budget

Budgeting is more enjoyable than people like to think. It’s not easy, but it does become a habit, and once it does, budgeting becomes a fun way to find more ways to save, more money to put away, and more expenses to lower. You can do it, but you need to know how to start, where to save, and how you can find a technique that works for you. Budgeting is all about discipline, and the bucket method might be the best option for you. It’s not traditional, and you don’t need to go out and buy buckets in which to keep your cash. You can use the concept figuratively if you’re more comfortable with your money in the bank.

Start reading to learn about the bucket method and why it works.

Why Use the Bucket Technique

The bucket technique is simple, easy to understand, and quite efficient. If you’re struggling with a budget, use this concept to help put your money away. The general rule under this method is you take as many buckets as you need for your money, and you separate what you need into each one. When that bucket is empty each month, there’s nothing left for you to use. Now, you’re not required to use a bucket if you prefer your money be safe in the bank. You’ll simply use the bucket technique with multiple bank accounts, which will be referred to as your buckets from this point forward. To create your buckets, start with your money. Where does it come from and how much comes in each month? Where does it go? You have monthly expenses, bills you must pay, other sporadic expenses, and you must save. It’s harder than it sounds, but this is where you get started.

Continue reading to learn about monthly expenses under this technique.

Monthly Expenses

Your monthly expenses are all the expenses you pay every single month. These typically include your insurance, cell phone bill, utilities, gas, groceries, transportation, and schooling. Your monthly expense bucket needs to contain all the money that goes into this fund every month. Unfortunately, it’s not always easy to figure out precisely what you owe if certain expenses change monthly. For example, you might spend a little more than usual on gas one month or more on groceries the next. Your utility bill probably changes regularly, too. Do your best to average this out by keeping track of where your money is going by averaging out the amounts you’ve spent the past few months. It might take a month or two to get this account exactly as you need it give or take a few dollars, but you will get there. Now you’re only using this account to pay for your monthly expenses.

Continue reading to learn how to handle housing expenses and a mortgage using the bucket technique.

House Expenses and Mortgage

Your mortgage, lawn service, HOA fees, home insurance, property taxes, are expenses that occur when you own a home, and all of them go into the home expenses bucket. If your insurance and taxes are escrowed into your mortgage payment, don’t worry about those. Start figuring out how much you spend per month or year on the other things included in the cost of owning your home, and put the money needed for this into your house expenses bucket. This is the best way to make sure you always have the money to pay the mortgage as well as anything that might come up at home. A broken dishwasher, a repaired air conditioner, or even a plumbing situation might come right out of this fund if you budget a little extra each month to put into this bucket for just in case situations.

Continue reading to learn how to make a savings account work for you.

Savings Account

Did you know you’re meant to pay yourself first? Before you pay your monthly bills, you should put money into your savings account. The best way to start this is to find out how much you make and how much you owe and compare that to what is left over. Now you should save at least ten percent of your total income where possible. If it’s not possible, try starting lower and saving ten percent of what you have left over after you account for your bills. Put the money into your savings bucket each month before you pay for anything else. You only get to spend what is left over following a deposit into your savings account and into your other expense buckets. If you get a raise at work, put all the money from your raise immediately into savings. If you get a check in the mail for something you overpaid throughout the year, put it into your savings. You want to see your savings bucket grow as fast and as much as possible without making much effort at all. You want more money in the bank than you put out every month.

Continue reading to learn about emergency funds under this method.

Emergency Fund

Everyone needs an emergency fund, which should start with a minimum of one thousand dollars in it to cover the cost of an emergency if it occurs. This might be a last-minute airline ticket to see someone who is sick and dying, a car repair, or something else you weren’t expecting, such as a medical emergency. One thousand dollars is just a basic number to start with, though it is something you must have all the time. This money is only touched if you have no other options, and even then it should be replaced as quickly as possible. However, you should never stop contributing to this account when it reaches one thousand dollars. Once you reach this number, continue adding enough money to the bucket to cover the cost of three months of your living expenses. Then add enough to cover three more months, followed by another three, and so on. You ultimately want this bucket to contain enough money for you to live off of for one year if there is an emergency to warrant its use.