| The four bucket personal finance system is a simple | | | | to your personal convictions for managing money, |
| and practical alternative to personal budgeting. Think | | | | but an amount is to be put into each bucket each |
| about this: how many times have you heard the | | | | time you receive a paycheck. |
| advice that you need to get on a budget to start | | | | An example, if your monthly living expenses are |
| managing your money better? How many times have | | | | $2,800 and you are paid $1,000 a week, using the |
| you attempted this strategy, kept it up for a couple | | | | recommended allocations, $700 are for expenses, |
| weeks and found that budgeting just does not apply | | | | and $100 to each of the remaining buckets. The "Pay |
| to the dynamics of real-life? This is why more people | | | | Yourself First" capital will be used exclusively to |
| are choosing the four bucket personal finance | | | | create new wealth. The reserve amount is used to |
| approach as a practical alternative to living by a | | | | build an emergency fund and funds for special events |
| complicated budgeting system. | | | | such as investing in personal business or education, |
| The Four Bucket Personal Finance Approach | | | | and savings towards a family vacation or the |
| Picture your personal finances as four buckets sitting | | | | purchase of something which would just add more |
| in front of you. On each of these buckets, there is a | | | | enjoyment to your life |
| label which tells you what the money in that bucket | | | | Finally, the amount in your contributions bucket can |
| is going to be used for: | | | | be used to purchase gifts for your friends or family |
| 1. Expenses | | | | members or to give to charitable causes. |
| 2. "Pay Yourself First" | | | | Keeping it Simple |
| 3. Contributions | | | | As you can see, the four bucket personal finance |
| 4. Reserve | | | | system is a simple alternative to budgeting which can |
| That's the four simple personal finance categories. | | | | easily fit within the context of your real-life. Making |
| Your objective is to put a predetermined amount into | | | | the management of your personal finances simple |
| each bucket whenever you are paid. A | | | | and practical will make it much easier for you to stick |
| recommended allocation percentage is not more than | | | | with it until you get the results you want. So if you |
| 70% of disposable income for expenses, and 10% or | | | | are worn out with trying to live your life according to |
| more for each of the three remaining buckets. | | | | a personal budgeting system, try the four bucket |
| However, you can change the allocations according | | | | personal finance approach instead. |