How Do You Fill the 3 Buckets?

You’ve written down your needs for your 3 Buckets and divided them up into your Short-Term Bucket, your Mid-Range Bucket, and your Long-Term Bucket. Now it’s time to fill the Buckets with assets – to pay for those future debts as they occur.

Again, I don’t care what you put on your lists – they are YOUR needs, not mine. You’ll just need to figure out a way to pay for them from your 3 Buckets as they occur. When you get to this point – where all your future needs are being funded as you go without incurring additional debt – you have reached “Financial Security” and life is good.

Divide Your “Extra Money” Into 3 Parts

Remember, half of your “extra money” is going towards debt reduction, and the other half is going towards savings and investment (or as we put it in a previous article – towards “future debt reduction”). I want you to divide the half that is going towards savings into 3 equal parts. This is going to seem crazy, but it works!

Take these 3 equal parts and put 1 part into your Short-Term Bucket, 1 part into your Mid-Range Bucket, and 1 part into your Long-Term Bucket. When you are first starting out, you may just have to put all of your “extra-money” into a savings account for a little while until you get this thing rolling a little bit. But just understand that the idea is to put a equal part each month into EACH bucket.

We have a separate article on our website here that talks in greater depth about each of our 3 Buckets. But I just wanted to take one article to give you an overall view of HOW you’re going to fill the buckets..

The 3 Buckets are Different Sizes

When you first start out, all 3 Buckets seen HUGE! How in the world are you going to get enough money into savings to pay for all your short-term needs this year? Let alone putting away enough money for college for the kids and retirement and world travel later on? Especially since you’re supposed to be dividing your “extra money” in to 3 parts and putting a little into each bucket equally?

Here’s a couple of keys to give you a glimmer of hope:

1. Because you have debt you’re trying to pay off, only HALF of your “extra money” is going towards these 3 Buckets. Once you get the debts paid off, you’ll have an “extra half” to add to your Buckets – doubling your savings! That’s huge! And because you’re not taking on more debt along the way, and you’re making better spending choices, and you’re earning more money – you’ll start having even more “extra money” to apply.
2. This system helps you prioritize your spending and sort out “needs” from “desires”. Maybe you have a short-term need to buy, but you don’t have enough in your Short-Term Bucket to pay for it. This system, if you can resist the temptation to take on more debt, will help you find alternatives to that “need”.

Maybe you have a child ready to start college this Fall, but you have no college savings. It would seem you would “need” to take out a student loan to pay for the college of her choice. Don’t want to let the kids suffer because of YOUR lack of foresight. But your kid doesn’t NEED to attend that college in the Fall. Instead of spending money you don’t have, opt for a Community College for a year or two (seriously, the classes are about the same and will transfer over at full credit) and this will allow you time to fill your Mid-Range Bucket to pay for the final years, AND it will teach your kid a valuable lesson about financial management.

You’ll put money into the 3 Buckets equally, but the 3 Buckets aren’t the same size. Your Short-Term Bucket is the smallest one – and you can make it even smaller by cutting back and making different choices as you go. Your Mid-Range Bucket is the next smallest one. And your Long-Term Bucket is the biggest one – so big it can never be filled completely.

Once you’ve filled the Short-Term Bucket, you’ll be able to start dividing your “extra money” into only 2 parts – half goes in the Mid-Range Bucket and half goes in the Long-Term Bucket. And then, once the Mid-Range Bucket is full, you get to put ALL your “extra money” into the Long-Term Bucket. This is a really good time in your financial life – all your short and mid goals are funded and you’re just building wealth for the future. Nice!

Set up your 3 Buckets TODAY! Don’t wait until you’re better off – do it NOW! Better off ain’t coming unless you take action on this right away. It’ll change your life because you’ll finally be in control!

Related Articles:

• The Long-Term Bucket
• Two Long-Term Bucket Vehicles to Start With
• Your Short-Term Bucket
• The Future is NOW! A further explanation of Your 3 Financial Buckets
• Your Financial Bucket List