What’s the best way you’ve found to “bucket” your money?

[deek]

Lately, my wife and I have been trying to generate ideas and find info online on how to best bucket our money towards certain goals and expenses. Is there any alternative besides just creating a handful of different bank accounts and specifying what each account is for?

Mostly just concerned with how to best split up our emergency fund, dream/vacation fund, monthly bills fund, and potential home improvement fund.

[NotJen]

I just used a spreadsheet and kept the money (mostly*) in the same account with the highest-as-possible interest rate.  I had a line for each bucket/goal, plus an "unassigned" category to make sure everything added up to my total cash balance.  Columns for "current balance" and "goal".  Easy peasy.  Now that I'm FIREd, no need to earmark money for anything specific - it's all in the "spend as needed" bucket.

*I take advantage of bank account bonuses with my cash that is sitting around not doing much.

[comicguy]

I use Cap One for my HYS and just have different labeled accounts under the main account (I currently have 10 diff sub accounts) makes it easy to see what I have available for remodel fund, roof repair, vacation, cruise, oversees vacation, vet fund, etc...

[Dicey]

I just used a spreadsheet and kept the money (mostly*) in the same account with the highest-as-possible interest rate.  I had a line for each bucket/goal, plus an "unassigned" category to make sure everything added up to my total cash balance.  Columns for "current balance" and "goal".  Easy peasy.  Now that I'm FIREd, no need to earmark money for anything specific - it's all in the "spend as needed" bucket.

*I take advantage of bank account bonuses with my cash that is sitting around not doing much.

Ditto.

[FIREin2018]

Lately, my wife and I have been trying to generate ideas and find info online on how to best bucket our money towards certain goals and expenses. Is there any alternative besides just creating a handful of different bank accounts and specifying what each account is for?

Mostly just concerned with how to best split up our emergency fund, dream/vacation fund, monthly bills fund, and potential home improvement fund.

Both Ally and CapOne banks allows you to create multiple accts under your main acct.
Most employers now days allow you to split your direct deposit to 2 accts.

Have 1 acct as your general spend.
Create a 2nd acct for your bucket item (ie: emergency 3months).
Once that's filled, create another bucket (ie: dream vacation $10k) and fill out a new direct deposit form from employer.
Once that bucket is filled create another one, etc, etc...
Note: Hopefully you have enough in your general spend to max out Roth by tax day of the following year.
If not, then maybe your 2nd bucket after Emergency is Roth.

[ixtap]

I tried using a spreadsheet, but frankly I found it annoying. I might have saved up for clothes, but what I really need this month is new tires for the car...

[twinstudy]

I buy a new property whenever I have enough saved for a deposit, then I treat the mortgage as a big bank account, like a reverse savings account. Once I fill up the mortgage I buy another property. Over time, it's taken fewer years to pay off each mortgage. It's a convenient way to track my progress and it makes the process of investing more fun.

[HipGnosis]

I tried using a spreadsheet, but frankly I found it annoying. I might have saved up for clothes, but what I really need this month is new tires for the car...

That's not the spreadsheet's fault...

[Telecaster]

I tried using a spreadsheet, but frankly I found it annoying. I might have saved up for clothes, but what I really need this month is new tires for the car...

This is why I'm not a fan of buckets.   While buckets might be useful conceptually, you really only have one bucket.  Let's say you are saving up for a dream trip and the transmission goes out.  So you pay out of the maintence bucket.  Now the maintenance bucket is empty.   Where does the money come from to refill it?  It has to come out of some other bucket. 

[NotJen]

I tried using a spreadsheet, but frankly I found it annoying. I might have saved up for clothes, but what I really need this month is new tires for the car...

This is why I'm not a fan of buckets.   While buckets might be useful conceptually, you really only have one bucket.  Let's say you are saving up for a dream trip and the transmission goes out.  So you pay out of the maintence bucket.  Now the maintenance bucket is empty.   Where does the money come from to refill it?  It has to come out of some other bucket.

You refill it by directing new money there until it is full again.  If a second maintenance issue arises - emergency fund.

To be fair, I don't like this sinking fund approach, because I think it is too fussy.  But then again, I had a large income and could cash flow all of my irregular expenses and didn't budget my spending.  I did use spreadsheet buckets to track savings for house down payment, car, and travel because that allowed me the mental freedom to actually spend the money once my bucket was full. 

Whatever works for you.

[Dave1442397]

We have a joint checking account for everyday expenses.

I opened three Fidelity accounts for our emergency fund, vacation savings, and my personal spending money (my wife prefers to keep cash).

I started doing this just over a year ago, and I like it because when we used the designated vacation money for our vacation, it didn't feel like we were taking it from something more important.

So far, we haven't needed the emergency fund money for anything. Once our daughter is done with college, I'll start using it for a new roof, windows, and a bathroom.

[FIREin2018]

To be fair, I don't like this sinking fund approach, because I think it is too fussy. 
But then again, I had a large income and could cash flow all of my irregular expenses and didn't budget my spending.  I did use spreadsheet buckets to track savings for house down payment, car, and travel because that allowed me the mental freedom to actually spend the money once my bucket was full. 

Same here about cash flow paying for 1 time offs like new tires, new water heater or even a new roof.
Paying for a new car with cash dipped into savings though but I had no angst in getting the bank check for it.
My old 10yr old car started having transmission problems and a new transmission was worth more than the car.
I massed emailed dealers around me for their best out the door price for the make/model/options i wanted.

Like the water heater and roof, i needed it.
Unlike helming and hawing over 20cents for a burger (see my thread about that), giving that 5figure bank check to the dealer was mentally painfree.

Before I FiRED, i probably could have used buckets for permission to spend.
Once that bucket was full, spend it till empty.
I don't remember what the expensive things that were a want instead of need, but I didn't do it.
On the other hand, it might become a hedonistic trap and soon keep setting bucket after bucket at the cost of savings.

Now that i FiRED, i still have that mindset of not spending on wants even though my net worth has actually increased because of the hot stock market.
I might actually create buckets and fill 1 at a time. When full, spend it. Then fill the next bucket.

hm.. I might switch all the $ above what i Fired with years ago to a dividend fund and use the dividend payouts to fill the buckets.
Thx for your post!

[Telecaster]

You refill it by directing new money there until it is full again.  If a second maintenance issue arises - emergency fund.

And now it is time to refill the emergency bucket.  That money comes out of general funds, right?   Which means your general funds bucket, the maintenance bucket, and your emergency bucket are mathematically the same bucket.     

Again, buckets can be conceptually useful, but they also make things more complicated.  There was a recent thread about the equity glidepath in retirement.  One strategy was to have a bucket with a certain asset allocation that you draw from for a period of years, then you switch to a different bucket with a different allocation that you draw from, and so on.   That seems awfully complicated compared to simply rebalancing to your desired allocation once a year--which you should do anyway.   It wasn't clear to me what advantage that multi-bucket approach actually provided.   

[Ron Scott]

We have 3 buckets: checking account for spending, IRAs, and a taxable brokerage account.

Interest and dividends paid in the taxable brokerage gets transferred into checking as received and spent. Once or twice a year, depending on need, we sell some amount of our bond fund in the taxable brokerage and that too gets transferred into checking. The rest we leave alone.

It works for us…

[Telecaster]

We have 3 buckets: checking account for spending, IRAs, and a taxable brokerage account.

Interest and dividends paid in the taxable brokerage gets transferred into checking as received and spent. Once or twice a year, depending on need, we sell some amount of our bond fund in the taxable brokerage and that too gets transferred into checking. The rest we leave alone.

It works for us…

That's not what the OP was discussing.   The OP wants to have individual accounts/accounting for dedicated for specific expenses.  What you are describing is making periodic withdrawals for general expenses from a single bucket. 

[mistymoney]

Lately, my wife and I have been trying to generate ideas and find info online on how to best bucket our money towards certain goals and expenses. Is there any alternative besides just creating a handful of different bank accounts and specifying what each account is for?

Mostly just concerned with how to best split up our emergency fund, dream/vacation fund, monthly bills fund, and potential home improvement fund.

Any of the above suggestions useful?

I have a few different accounts for my 401k and then the rollovers. I do want to use a bucketing kind of thing for them rather than consolidating - but the amounts are not at the right levels. I plan to tinker with it over time and se where it may go. But - I don't have a real plan as yet.

[deek]

Lately, my wife and I have been trying to generate ideas and find info online on how to best bucket our money towards certain goals and expenses. Is there any alternative besides just creating a handful of different bank accounts and specifying what each account is for?

Mostly just concerned with how to best split up our emergency fund, dream/vacation fund, monthly bills fund, and potential home improvement fund.

Any of the above suggestions useful?

I have a few different accounts for my 401k and then the rollovers. I do want to use a bucketing kind of thing for them rather than consolidating - but the amounts are not at the right levels. I plan to tinker with it over time and se where it may go. But - I don't have a real plan as yet.

Yes, I think our best option is to find a specific bank that lets us have a "primary" account and secondary ones below that.

Like some here, I also struggle with the want to not overcomplicate things. And in overcomplicating things with buckets, is it possible that we don't contribute enough savings to places where our money makes money?

This month and next, before we decide on bank to bucket money, we are going to track every expense we have and see where we are at cash flow wise. That might make it easier to determine how much flexibility we have with the bucket idea.

[Sugaree]

I just used a spreadsheet and kept the money (mostly*) in the same account with the highest-as-possible interest rate.  I had a line for each bucket/goal, plus an "unassigned" category to make sure everything added up to my total cash balance.  Columns for "current balance" and "goal".  Easy peasy.  Now that I'm FIREd, no need to earmark money for anything specific - it's all in the "spend as needed" bucket.

*I take advantage of bank account bonuses with my cash that is sitting around not doing much.

I do something like this for medium-term expenses.  These are things that I plan to use in <6months.  And then use the Ally buckets for longer term expenses. 

[deek]

Sidenote - I'd really like to start a journal for our journey to FIRE. What is the best way to do this in order to have discussions with others here regarding our experiences? Is it a dedicated thread in General Discussion? Or elsewhere?

[ixtap]

Sidenote - I'd really like to start a journal for our journey to FIRE. What is the best way to do this in order to have discussions with others here regarding our experiences? Is it a dedicated thread in General Discussion? Or elsewhere?

There are a few journals which are group discussions based around pretty specific topics. If you want to record your own journey with others chiming in, a journal is a good place for that.

[windytrail]

Sidenote - I'd really like to start a journal for our journey to FIRE. What is the best way to do this in order to have discussions with others here regarding our experiences? Is it a dedicated thread in General Discussion? Or elsewhere?

Perhaps the "Case Studies" section could also be beneficial. There you can detail your income and spending, calculate your savings rate, and share your FIRE timeline/goals. It's useful for others to see these things before being able to offer the best advice.

[deek]

For anyone interested, I just started a case study thread to help journal about and reflect on where this financial journey takes us. Just as a quick snapshot, here's where we currently stand:

Checking accounts: $12,600
HYSA: $77,700
Other savings: $3600
Investment/retirement accounts (not including my wife's retirement - that will be included soon): $118,900
Crypto: $18,528
One student loan: ($13,890)

Earnings:
Me: 52.50/hr (contractor in tech/ecommerce)
Wife: $86k salary (education)

Est. Home Value: $310k

Cars: 2013 Hyundai Elantra (145k miles), 2018 Ford Fusion (100k miles)

Ultimately, we want to retire early, we just aren't quite sure how early is feasible yet.

[Telecaster]

As a quick glance, you have an enormous amount in cash/equivalents compared to your investment accounts.  Early retirement is feasible, but you need to invest way more money.  That much cash isn't helping you. 

[deek]

As a quick glance, you have an enormous amount in cash/equivalents compared to your investment accounts.  Early retirement is feasible, but you need to invest way more money.  That much cash isn't helping you.

Yes, that's on the to-do list. The goal is to have about 25k in our collective E-Fund, with some additional "you do you" savings on top of that. Everything else will be going to investments (hopefully) soon.

[TimCFJ40]

As a quick glance, you have an enormous amount in cash/equivalents compared to your investment accounts.  Early retirement is feasible, but you need to invest way more money.  That much cash isn't helping you.

Yes, that's on the to-do list. The goal is to have about 25k in our collective E-Fund, with some additional "you do you" savings on top of that. Everything else will be going to investments (hopefully) soon.

We auto invest a fixed amount each month from our paychecks, leave ~$30k in the bottom of our checking account as the Emergency/Larger Purchases fund.  Generally we spend a little less than we deposit in that account each month, so every ~6 months we'll chop it back down to $30k by a one-time investment deposit, or we might have a larger purchase or charitable contribution we've been putting off, and use that to realign.  It works for us, but we certainly have some friends that couldn't bear seeing that $30k "Just sitting there" and would end up with a new bass boat in about 5 sec.  Only you can decide whether you need the buckets for self imposed discipline.  To me, the only benefit of the buckets is just that, self imposed discipline.  With as easy as it is to move money around these days, the buckets really don't put up much of a fight against reckless spending.   

[deek]

As a quick glance, you have an enormous amount in cash/equivalents compared to your investment accounts.  Early retirement is feasible, but you need to invest way more money.  That much cash isn't helping you.

Yes, that's on the to-do list. The goal is to have about 25k in our collective E-Fund, with some additional "you do you" savings on top of that. Everything else will be going to investments (hopefully) soon.

We auto invest a fixed amount each month from our paychecks, leave ~$30k in the bottom of our checking account as the Emergency/Larger Purchases fund.  Generally we spend a little less than we deposit in that account each month, so every ~6 months we'll chop it back down to $30k by a one-time investment deposit, or we might have a larger purchase or charitable contribution we've been putting off, and use that to realign.  It works for us, but we certainly have some friends that couldn't bear seeing that $30k "Just sitting there" and would end up with a new bass boat in about 5 sec.  Only you can decide whether you need the buckets for self imposed discipline.  To me, the only benefit of the buckets is just that, self imposed discipline.  With as easy as it is to move money around these days, the buckets really don't put up much of a fight against reckless spending.   

I think you are where we hope to find ourselves 1-2 years down the road. While we aren't big spenders, we are prioritizing buckets (and monthly expense tracking) to confirm that we are as disciplined as we think we are.

[charis]

As a quick glance, you have an enormous amount in cash/equivalents compared to your investment accounts.  Early retirement is feasible, but you need to invest way more money.  That much cash isn't helping you.

Yes, that's on the to-do list. The goal is to have about 25k in our collective E-Fund, with some additional "you do you" savings on top of that. Everything else will be going to investments (hopefully) soon.

We auto invest a fixed amount each month from our paychecks, leave ~$30k in the bottom of our checking account as the Emergency/Larger Purchases fund.  Generally we spend a little less than we deposit in that account each month, so every ~6 months we'll chop it back down to $30k by a one-time investment deposit, or we might have a larger purchase or charitable contribution we've been putting off, and use that to realign.  It works for us, but we certainly have some friends that couldn't bear seeing that $30k "Just sitting there" and would end up with a new bass boat in about 5 sec.  Only you can decide whether you need the buckets for self imposed discipline.  To me, the only benefit of the buckets is just that, self imposed discipline.  With as easy as it is to move money around these days, the buckets really don't put up much of a fight against reckless spending.   

The bolded is funny to me because I similarly couldn't bear to see 30k just sitting in our checking account with an interest rate of like .25%.  I would be very tempted to invest it, not spend on a boat though.

That's why we have a direct deposit to an online high yield savings account that functions as our Emergency Fund, which doubles as a bucket for large expenses. 

We don't really need a true EF at this point because we have a high NW and robust Roth IRAs/unreimbursed HSA funds, so anything we can't handle with cash flow or a credit card float (put on a card and pay off before statement balance is due) wouldn't be a true emergency.