You might be worried about your income and the way it disappears. If you are confused about your expenses and savings, you are at the right place. This article brings a smart idea for you to help you save money and spend wisely. Thus, take some time and go through this idea. Barefoot investor bank accounts bring the option of multiple buckets for you.
You cannot save all your income and enjoy it at the end of the month. The expenses are so high that you have to manage everything in your monthly income. Moreover, you have to save money for future purposes. Here is the smart way to spend money. Let’s go through it.
Set Your Goals
At the outset, you need to set your goal. This goal covers both your end goal and monthly goal. Your financial situation, in this case, matters the most. This is because you have to set an achievable goal. If it is out of reach, the goal has no value.
Thus, it would help to set your goal in the initial days. It will help you devise the plan accordingly. Other than this, you will also stay focused on your goal and work more passionately if you are clear about your goal.
Adjust Your Lifestyle
The second most important thing is to adjust your lifestyle. This could be your favorite thing too. However, if you want to live a life free from financial problems, you need to adjust your lifestyle accordingly from the start.
Money Buckets
Money buckets are a great opportunity for barefoot investor bank accounts. This account lets you use three buckets. Your income is saved in these accounts as per the quota, and you are free to use them under certain rules and conditions. Let’s study these buckets in detail.
Daily Expenses and its Division
Daily expenses mean the daily expenses that include your food, residence, and transport. The daily expenses bucket takes 60% of your total income. You can further divide this 60% into food, transport, and others. It is up to you how much you spend on a particular thing.
The rest of the 40% of your income goes into three accounts. Splurge account takes 10% of this total. You can spend this amount on any activity that is fun for you. This could be getting your desired dress, food at a good restaurant, or other wishes. Once these money are spent, they are gone.
The next 10% is for a smile account. You can use this amount for your recreational trips or fulfill any other expenses from this account that takes a large amount from your income. The rest of the 20% is specified for the fire extinguisher account. This account can be used to pay a mortgage, save for a home deposit, or any other situational purpose.
Rainy Day Fund
Rainy day fund is the name of the second bucket. It is specified for emergencies. You must have a backup for the situations that fall on you like a heavy burden. Thus, it would help if you saved some amount in your account. Rainy day fund is particularly for such situations.
Long Term Wealth
Long term wealth plan is for your future plans. You can save this account for your life goals. These goals may vary as per your conditions. If you take the smart move at the start and place some savings in this bucket, you will be content in the future.
Final Thoughts
The use of these three buckets can yield many benefits for you. You will attain financial stability and a good division of your income. Moreover, you will lead a happy and content life if you have enough savings for the future.