# It’s time to put your money on autopilot

I’ve created a simple spreadsheet I use once a month that tells me where I should put my extra money, based on money flowing to different “buckets”. I find it pretty useful, and you might too.

**Who this is for:**

- those who want to think less about money
- those that want to be financially secure
- the bucket recommendations are geared toward U.S. residents

**What this requires:**

- Consistently earning more than you spend each month
- Knowing your monthly expenses
- Putting your income automatically in bucket 1 (usually a checking account, but more on that later)

**Here’s how it works. Each month:**

- Put in the current balance of your accounts
- Do what the spreadsheet says

# The Bucket Finance System — How it Works

Think of where you put your money as buckets. Your checking account is a bucket. Your savings account is a bucket. Your retirement account is a bucket, your credit card is a bucket.

You fill (or drain, in the case of debts) a bucket to a desired level, and then you fill (or drain) the next bucket with what you have left. The money flows from one account to another.

The spreadsheet will tell you if a bucket is overflowing, and where to put the excess money you have.

The first step to using this system is to create your buckets.

**Each bucket should have:**

- A name
- A current amount (AKA account balance)
- A desired amount ($0 for debt)

# Setting Up the Spreadsheet

- Put the Bucket Name in column B.
- Put the Current Amount in column C.
- Put the Desired Amount in column D.

# Using the Spreadsheet

Each month, put in a new current amount for each bucket. This process is made easier if you consolidate your financial information using a service like www.mint.com.

Look at the “Money Moves” column and transfer the money as specified.

Occasionally reassess your buckets (once or twice a year) to make sure they still align with your financial goals.

I hope you find this tool useful. I’d love to hear feedback in the comments section.

# Bucket Recommendations

I relied heavily on this flowchart from the subreddit r/personalfinance to create my buckets. Here is my recommendation for your buckets, but you can do what you want.

*Not everyone will have or need all of these buckets. Assess which are right for you.*

*Bucket 0*: Contribute up to your employers match automatically for any employer-sponsored retirement accounts (like a 401k)

**Bucket 1: Checking account. Desired amount: twice your monthly expenses**

- Twice your monthly expenses gives you a nice cushion for any unusual spending patterns, so you feel secure in automatically deducting your expenses

**Bucket 2: Emergency savings account. Desired amount: ****1 month of expenses (to start)**

**Buckets 3, 4, 5…: High interest debts. Desired amount: $0**

- Any debt over 10% interest rate, with the 3rd bucket being the highest interest (AKA the avalanche method), the 4th being the next highest, etc…

*In the spreadsheet. The desired amount for “debt” buckets will always be $0, and the current amount will be shown with a negative sign. Ex: $1234 in credit card debt will be depicted as -$1234.*

**Bucket 2.5: Emergency savings account. Desired amount: ****3 - 6 months of expenses**

- Go back to your emergency savings account and increase your desired amount to 3 - 6 months of expenses

*The next bucket is listed as Bucket 4, but it would just be 1 more than whatever is next after high interest debt.*

**Buckets 4 ,5,6… : Moderate interest debts. Desired amount: $0**

- Any remaining debts with over 4% interest rate, with the higher interest first (just like with high interest debts)

**Bucket 5: ****Roth or Traditional IRA****. Desired amount: ****maximum limit**

- Contribute up to the maximum yearly limit for a Roth or Traditional IRA. Resets to $0 for the next year
- I like the Vanguard Target Retirement Funds as an investment for how straightforward they are

**Bucket 6: Required, large upcoming purchases. Desired amount: cost of purchases**

- College, professional certifications, a car so you can get to work, etc…
- Set aside in a separate savings account

**Bucket 7: Company retirement plan (usually a 401k). Desired amount: 15% pre-tax income**

- You want your total yearly retirement savings contribution to be at least 15% of your current income at this point (including your IRA contributions)
- Desired amount is the amount contributed in that year, as it resets each year

**Bucket 8: ****Health Savings Account**** (if eligible). Desired amount: ****maximum contributions allowed**

- Desired amount is the amount contributed in that year, as it resets each year

**Bucket 9:**** 529 Education Plan****. Desired amount: ****up to maximum tax credit**

- Desired amount is the amount contributed in that year, as it resets each year

**Bucket 10, 11, 12…: Low interest debts. Desired amount: $0**

- Any remaining debts with the higher interest first (just like with high and moderate interest debts)

**Bucket 11: Other savings goals. Desired amount: customized to goal**

- Vacation fund, saving for vehicle, down payment, etc…
- Recommend putting this in a second savings account than your emergency savings to avoid confusion

**Bucket 7.5: Company retirement plan. Desired amount: ****maximum contributions allowed**

- Look into any other tax-advantaged accounts you can
- At this point, start researching the FIRE movement and see if this is something for you

**Bucket 12: Taxed Investments. Desired amount: to infinity and beyond**

- I’m partial to the Vanguard Total Stock Market Index Fund (VTSAX) but you do you.

# tl:dr

Use this spreadsheet to help decide where to put your extra money once a month. Use minus for debts, and check out this flowchart from Reddit to get some inspiration for your buckets. I found this useful, hope you do too!