How to pick a proven budgeting strategy that works for you
by Nicole Willing
We've compared 3 popular approaches to help sort your finances.
1. Divide your income into buckets
This strategy is backed by Scott Pape himself.
Bestselling finance author Scott Pape, the "Barefoot Investor", popularised this "back of the serviette" strategy. He suggests dividing your income between three separate buckets, each with its own bank account. Use automatic transfers to manage each account.
- Bucket 1: Daily expenses
- Bucket 2: Emergency
- Bucket 3: Long-term wealth
- Structured and easy to automate
- Encourages you to tightly control spending
- Less structured than other approaches
- Doesn't encourage you to analyse spending