Who else is over the fear mongering news cycles that we keep getting fed? Well, weirdly it is kind of our fault as we’re the ones that keep turning on the tv or clicking on articles every ten bloody seconds.
One news story that is well and truly doing the rounds at the moment is COST OF LIVING, MORTGAGE STRESS and whatever else they think is the end of the world.
Now today I am going to talk to you about personal finances. Something that I think all my mates know is something I take fairly seriously. Why? Because I am a tight bastard.
In 2016 my dear mother gave me a book to read while I was home in Longreach for a break. (Longreach for a holiday, lucky me…) The book? The Barefoot investor. People may not know this about me but up until this point I had never finished a book (SparkNotes got me through school) however as soon as I opened this book up on that morning I literally didn’t put it down until I was finished that afternoon. It really did change my life.
Now the irony about personal finances is that NO ONE TALKS ABOUT THEM. Ha! Just like mental health aye, oh the irony. I was never taught about personal finances growing up, my parents never spoke about finances and I guess the world believes we should just work it out on our own….
The barefoot investor has turned that logic on its head. I seriously believe that things like tax, super, insurances and investing have all been over complicated just so us every day people cock it up. Luckily for all of us, a bloke named Scott Pape has created the perfect step by step guide on how to take control of your personal finances and help remove the stress and burden of crippling debt and limited super and savings.
Now with the flavour of the month being all things financial stress I thought it would be poignant to discuss with you one of the easiest things to implement out of his book. The buckets! I know as much as the next bloke how little people make time to read these days so I will explain the Buckets to you in a brief summary, so hopefully you can start organising your finances a little better as of today!
Take a look at this diagram straight out of Scott Pape’s Book - The Blow Buckets.
Pape, S., The Barefoot Investor. (2022). The Blow Buckets.
Before I took on the buckets system I would have one single account where I took in my weekly wage, had my subscriptions go out, bought my fuel, paid for my weekend shenanigans etc. and by the end of most (every) weeks, it was drained down to a lovely sum of sweet fuck all. Then pay day would come around, I would have an account with money in it and off I would go again spend, spend, spend.
If you implement this simple system below and stick to it I think you will notice two things within the next three months. The first will be, fuck me we used to spend a lot of money on shit we really didn’t need and the second one will be fuck me I can’t believe how much we have saved!
So let’s get your buckets set up.
- Daily Expenses - 60%
This is where you get your weekly pay allocated every week. However, it is where you will set up your automatic transfers each week to your other accounts which we will get to in a moment.
Your fuel costs, insurance payments, food, transport, utilities as well as rent or mortgage repayments will come out of here. Basically all life essential payments. You may be sitting there going ‘60% is not enough to pay for all my essential life stuff’ And I would say, ‘really?’
- Splurge! - 10% (everyone's fav)
This is the coin you are allowed to spend on whatever you would like. Grog, tickets to a show, a giant foam cowboy hat, it really does not matter. This is the money you are allowed to do anything with and have fun doing. Best part is, once it's gone for the week that is it… so spend it wisely.
- Smile :) - 10%
You know how over the last few weeks you have been cursing all the dickheads living it up in Europe or the families going to Bali for a month etc. and you're thinking to yourself ‘What about me?’ Well, this account is going to allow you to have that holiday when you want!
Every employee gets 4 weeks of leave every year and this account is going to put 10% of your weekly take home into a separate account to use on those 4 weeks. Just think, this time next year you could be having a Mojito brought to you by Katut himself!
- Fire Extinguisher - 20%
This is your savings account….Don’t you dare touch it unless you HAVE to. My wife and I work on the principle that as soon as that account gets to $5k we instantly transfer it to our long-term savings account so it is out of sight and out of mind.
So seem simple enough? Great! Get onto your online banking, order a splurge card, set up your automatic transfers and get your personal finance journey underway. It has been a game changer for me and my wife and it can be for you.
I'm so passionate about this stuff that we are going to give a copy of the Barefoot Investor book to the first person to respond to this email with why they want to get their personal finances under control.
Have a cracking day!
DISCLAIMER: TradeMutt and I (Ed Ross) are not financial advisers. You should consider seeking independent financial advice to check how this relates to your unique circumstances.
TradeMutt is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this article.