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Take Charge of Your Finances with Bucket Budgeting

By Michele Harris
November 29, 2023
senior woman going through a budget

Keeping a budget is a great way to manage your finances, and one method that has stood the test of time is called bucket budgeting. 

Years ago, it was known as "envelope budgeting" because people divvied up their cash into different envelopes for expenses like groceries and car insurance each month. These days, young adults across social media platforms are referring to the method as "cash stuffing." 

Regardless of what you call it, it's a great way to apportion your money into categories that will help you prioritize your spending. 

Categorize your expenses

The needs category covers things like rent/mortgage, car payments, and insurance--all the monthly expenses that are predictable and recurring. Another category, wants, is for non-necessities like vacations, restaurant meals, and entertainment. The third category is designated for savings and debt repayment. 

You can fund the categories however you'd like, but a good rule of thumb is to allot 50% of your cash to needs, 30% to wants, and 20% to savings and debt repayment. 

Jamie Bosse, a financial planner at Aspyre Wealth Partners in Overland Park, Kans., customized her approach by dividing her expenses into five categories. 

"You may need more or less buckets depending on the expenses you have and want to fund," says Bosse. "Having funds earmarked for specific goals and expenses has really helped my family and clients manage their monthly finances."

Go mobile

Implementing bucket budgeting with cash is more straightforward because it's tangible. When you see the pile of bills start to run low, you know it's time to cut back. 

However, having a lot of cash lying around your house can be risky. Try keeping your money in the bank and using a budgeting app like Goodbudget or Nerdwallet to track your spending. 

Instead of creating five cash envelopes, Bosse opened five bank accounts. If you're unfamiliar with how online and mobile banking works, contact a representative at your bank of choice to get started. 

Easier than you think!

"I think bucket budgeting is actually easier for seniors and people with incomes that don't fluctuate month to month," explains Bosse. 

So, if you're looking for a practical way to manage your spending or simply want to get a better handle on your finances, why not try bucket budgeting?