Piggy bank savings

How to pick a proven budgeting strategy that works for you

Nicole Willing

by Nicole Willing

We've compared 3 popular approaches to help sort your finances.

Calculator with coins

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.

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  • 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

Pile of coins growing

2. The balanced money formula

This approach allocates 50% of your income to needs, 30% to wants and 20% to savings.

Needs are basic living expenses (rent, food, utilities). Wants are variable expenses like entertainment, and savings include investments, retirement accounts and debt


  • Simple approach with few categories
  • Allocating wants means you won't feel deprived


  • It can be tempting to justify wants as needs
  • Considers debts as savings


3. Pay "yourself" with savings first

This approach flips the usual spending breakdown and starts with saving.

Work out how much you need to save each month to meet your goals. Then, set up an automatic transfer to a savings account on payday.
You can allocate the rest of your income to your expenses any way that works as long as you stay within your means.


  • Flexible on spending
  • Prioritises a specific savings goal


  • Less structured than other approaches
  • Doesn't encourage you to analyse spending

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Which one to choose?

Go with buckets if you're feeling generally OK about your finances but want a better long-term plan.

Use balanced money if you've struggled with not overspending on non-essentials.

Use savings first if remembering to put money aside is your biggest challenge. (We've got more tips to help with that.)

And remember: the Finder app can help you analyse your spending and help track your bills. Let's get wealthy!

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