The Bucket Method | A Simple Finance Tool


What is the Bucket Method?

The bucket method is a quick and easy way to make sure all your hard-earned dollars are distributed properly within your life or business. The “buckets” are separate checking or savings accounts you have set up in your online banking portal.

Whenever a paid invoice or paycheck hits your bank account, you can set up banking “rules” that can distribute the money into the separate accounts automatically, or you can do it manually with some easy calculations in under 5 minutes.

When managing your business and personal finances, guesswork isn’t helpful. Knowing your exact numbers and where you stand financially allows you to make informed decisions and feel good about them.

It’s important to make sure you are also setting aside proper funds for small business taxes, future equipment purchases, or funds for hard products you’re selling back to your clients (i.e., albums, prints).

What Happened When I Started Using the Bucket Method

Before my best friend, Emily taught me the bucket method, I was not savvy with my dollars. I was always guesstimating and praying that I had the money I needed when I needed it. This was true of not only my personal finances but also my business ones. Sometimes I would have to dip into the money I set aside for my own paycheck to cover the costs of a wedding album because I hadn’t saved properly, YIKES!

After finally sitting down to crunch some hard (yet easy) numbers, I figured out how many buckets I needed for both my personal and business accounts, and got crackin’. Now that I’ve been doing this for 2 full years, my husband and I have retirement plans, rainy day funds, stock investments (all on automation) AND my business has real savings, cash flow for my own pay check and all my CODB covered. Whew, a huge sigh of relief.

Let’s dive into the ways you can start implementing the Bucket Method in your life.

Steps to Using the Bucket Method

Step One: Crunch your numbers

Log into your online banking and print out the last three months worth of statements. Start tallying where your money is going. For example: utilities, groceries, Amazon Prime (we are all guilty of this one), car payments, rent etc. Please note, THIS IS A NO JUDGEMENT ZONE. You are just hunting for the facts, not making opinions about them.

Step Two: Create a monthly budget based on your necessities

This means what is the bare minimum to keep the lights on in your business and the lights on in your home. The numbers you find for your personal will be the profits you need to hit in your business to make this work. If these numbers aren’t adding up, there might be a few other conversations you need to have.

Living within your financial means is serious business. A Gallup poll found that only 33% of Americans maintain a household budget or have a long term investment strategy. Even scarier, 19% have $0 saved to cover emergency expenses and only 31% have somewhere between $1-$500 saved.

THAT IS NUTS. Now, before you feel like slapping me for judging, what I actually mean is, we all have the power to take control of our money. Whether we have a lot or a little, we can take steps to feel financially secure in the circumstances we currently reside in. Baby bites still help you eat the whole elephant.

Step Three: Categorize Major Expenses into Buckets

In the guide, you’ll see a guide like the ones below. This shows you the actual buckets I have in both my personal and business banking accounts. Also, I highly recommend using a credit union, they do not charge for extra savings accounts or do they have minimums for those accounts (can I get an AMEN!).

Step Four: Log into Your Bank and Open Your New Savings//Checking Accounts

Most banks allow you to do this online. Personally, I bank with BECU and they require me to come in person just for my business banking. It’s not a big deal, make an appointment ahead of time online and you’ll be in and out super fast.

Step Five: Decide if you want to manually or automatically want to separate your money into buckets.

Personally, I have opted to do this manually. Since invoices hit my inbox at irregular times (being a seasonal worker), I need to have a little more wiggle room when it comes to moving my money around. However, banks also allow you to set up automatic rules that move money for you based on the date, frequency, and dollar amount.

Step Six: Revisit Your Bank & Budgets Often

Ah! Don’t go screaming into the dark yet, I promise this isn’t as scary as it sounds. By looking at your finances weekly (if not daily) allow you to know exactly where you money is and how it’s working for you. You might be able to break a few extra spending habits or notice how much that daily latte does add up. Either way, it’s important to keep an eye on your finances so you KNOW you’re headed in the direction you want to be.

In the Bucket Method PDF (which you can snag at the bottom of this post) I give you an example of what it looks like when a wedding payment hits my business bank account. I give you the exact percentages and dollars so you have a good example of how to apply this to your situation.

Final Thoughts

I know money talk can get all of our panties in a bunch. Trust me, I’ve woken up with night sweats and anxiety through the roof but it was because I was attempting to live in ignorance. But let me tell you, knowledge didn’t give me power. I knew everything I should have been doing. The actions I took with that knowledge is what gave me my power over my money.

If you’re looking for a great mindset book around the top of makin’ that dolla dolla bill, I highly recommend “You Are a Badass at Making Money” by Jen Sincero. I have a book review of it here on the blog, but you can always take my word for it and go snag it from Amazon.

I hope this helps give you peace of mind and a new tool in your toolbox.
p.s. Oh! And if you liked this one, you’ll love the Top 5 Applications I use to Grow My Business

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