Curb Your Spending: Bucket Budgeting

I think that I've voiced my desire to bucket budget in the past, I just didn't know it had a name. But alas! It is a tried and true budgeting technique...not just a last ditch effort for someone, like me, who is having too much 25 year old fun and thinks she spends too much on entertainment purposes! 

I'm am putting this into action in my world like NOW. For you, I just highly recommend...especially if you're not good at sticking to a budget.

Bucket Budgeting

You may have to open up an extra bank account (I did), but I'm excited about how awesome this is going to be!

The general gist:


There are three buckets for your money: two checking accounts and one savings account. (Sidenote: this is budgeting of your actual take home pay...so no 401k biz here...we're only talking about what goes in your pocket every two weeks).


There are two direct deposits made from your pay check: one to your savings account. I would say this should be at least 10% (depending on how much you put into your 401k and any other savings methods you use). The other to one of the checking accounts. Any alternate way of doing this is to have one direct deposit (if your job doesn't allow two or you don't feel like setting up a second) and then have automatic transfers from your primary checking to your savings and secondary checking account. 

The deposit to the savings stays there. Or gets transferred to further savings/investment accounts.

A portion of the deposit to the primary checking is transferred into your secondary checking accounts. Let me explain the difference between the primary and secondary.


Primary Checking: Houses the majority of your money and should be used for paying your bills. All of your bills, or as many as possible, should be automatic debited from this account on a monthly basis. 

Secondary Checking: Houses your disposable/entertainment income. YOUR SPENDING MONEY GOES HERE. This way, once you're out. You're out. And you cannot dip into your bill or savings money. It is strictly prohibited!

Three important rules for bucket budgeting:
1) No over drafting
2) No transferring additional "spending" money because you ran out
3) NO CREDIT CARDS!


This budget forces you to live within your means. Many financial advisers will attest that the number 1 way to stay financially stable is to learn to live within your means. Once you've done this...everything else is downhill from there.

This budget prevents you from having to micromanage your finances. All of your direct deposits and automated transfers move your money around for you. All you have to do is watch it go and only spend what you've given yourself. 

The article points out that this budget also creates "artificial scarcity" and forces you to learn to live on less. I agree andddd I love, love, love it!


WHAT I'D LOVE FROM YOU: If you try this and it works, comment and let us know. If you try this and it doesn't work, comment and let us know why not!