How to bucket your money

How to bucket your money

Explaining the life-changing magic of buckets.

16 April 2024 · 5 min read

Budgeting is a form of self-care. When you’ve got a budget, you’ve got a pretty good idea of what’s coming up, what you’re working toward, and how close you are to leading the life you want to live.

So it’s important to find a budget that works for you – and one that works for many is bucket budgeting.

What’s bucket budgeting?

Bucket budgeting is when you split all your income into different sized ‘buckets’ depending on what your priorities are. You can track these buckets in separate bank accounts, in a spreadsheet, or a budgeting app or website.

What’s the point of bucketing your money?

Bucketing your money can help you prioritise and stay in control of your spending. Each time you spend money, you’ll take it from its ‘bucket’. When that bucket runs out, you’ll decide whether to cover the difference from a different bucket, or that you’ll go without.

Keep in mind that you might not get your buckets right the first time. A Spaceship co-worker who used this method to save for a house said, “I was flexible enough to know that my budget was not going to be perfect at the start and the percentages or amounts I allocated for different expenses were living numbers that changed until they no longer needed to.”

How to start bucketing your budget

1. Figure out what your regular bills and expenses are

Go through your bank account transactions and see what you spend your money on. Try to get average figures that are aligned to your pay cycle: for example, if you get paid monthly, tally up how much you spend per expense per month.

Common predictable expenses include rent; phone and internet bills; car registration, parking and petrol; streaming subscriptions for Spotify and Netflix; food delivery or grocery bills; insurance; and coffee. Less predictable is how much you might spend on socialising, family, holidays, hobbies and your other priorities.

2. Give some thought to the future you’re building

As well as covering your day-to-day expenses, your buckets can also include your savings and investment goals. Whether your goal is to move out of home, buy a new car, buy a house, or retire early, it can find a home in this budget.

3. Decide on your buckets

How you structure your buckets is up to you. To be effective they should reflect as much of your spending as possible, while buffering in the goals you’re working toward. Common inclusions may include bills, debt repayments, an emergency fund, long-term savings, and investments.

The Barefoot Investor, Scott Pape, suggests three buckets with sub-accounts:

  1. A Blow bucket for spending and short-term emergencies.
  2. A Mojo bucket to provide ‘safety money’.
  3. A Grow bucket to build long term financial security.

Rebecca from our Real Money Talk series has eight buckets:

  1. Variable bills (healthcare, electricity)
  2. Fixed bills (rent, internet, phone, rego, insurance, Spotify, Netflix, etc.)
  3. Travel savings
  4. Investing savings
  5. Gifts and Christmas
  6. Emergency fund (over three months of expenses)
  7. Everyday spending (fuel, food and fun)
  8. Lifestyle savings buffer (larger purchases such as event tickets, new tech, appliances, etc.)

You can add, remove, and rename buckets through your personal finance journey. When you look at your list of buckets, you should ideally feel inspired. Your buckets could represent your financial lifestyle while giving you a sense that you’re building toward something, and have some security for rainy days.

4. Decide where you'll keep your buckets

It’s up to you whether you choose to open a separate account for each of your buckets or track them in another way, such as through budgeting software or a spreadsheet.

A Spaceship co-worker says,
“I use different bank accounts for each of my ‘buckets’ so that I am more likely to stick to the budget.

My buckets are:

  • My own spending – anything I want, eating out and groceries
  • Short term savings – for holidays, electronics, investments/stocks if I don’t have them in my wishlist
  • Expenses – rent and bills, insurance, subscriptions, my investment plan
  • Emergency fund

For the buckets I want to access easily, I have both in the same bank and both debit cards in my Apple Wallet.

For the buckets I don’t want to touch, I have them sitting in another bank and rarely touch them.”

We recommend giving your buckets names, too, so you feel more connected to your budget and the reason you’re keeping it.

5. Give each bucket a value

This is where the budgeting and prioritisation really starts. They say that economics is the distribution of limited resources to unlimited wants – your budget is exactly the same.

Some expenses are fixed, which means they’ll be the same month after month. These could include rent, a Netflix subscription or pre-paid phone plan. Some expenses are variable, which means they’re likely to change. These can include electricity bills, the money you spend going out, buying food, etc.

To work out the value for each of your buckets, first consider how much income you have. Then divide it up. You’ll need to assign enough money to the buckets that hold your ‘needs’. More negotiable is how much you assign to the buckets that hold your more variable costs.

Here’s how a Spaceship co-worker broke down his buckets:

  • House savings: 50% or $2,500
  • Bills: 20% or $1,000
  • Health expenses: 2% or $100
  • Emergency fund: 5% or $250
  • Treat yourself: 5% or $250
  • Spending: 18% or $900

If you find that your buckets are a bit out of whack, it’s time to redistribute your money to make sure you’re investing in the parts of your life that reflect the most value and personal growth for you.

6. Set up automatic transfers

Bucketing your money will only work if you actively use your buckets. Otherwise, you might try doing mental accounting which means you’ll try to keep track of it in your mind, could get a bit mixed up, and might think bucketing isn’t working for you.

One way to use your buckets is to automate savings into them. When you get paid, set up automatic transfers of the amount you’ve worked out each bucket is worth.

As our co-worker said, “I had set up my bank account to auto-transfer funds into the appropriate accounts the day after I got paid. This meant I didn’t even need to worry about those values unless I got a pay rise and could afford to up the amounts.”

7. Rebalance your buckets when you need to

In a perfect world, you’d have exactly the right amount of money in exactly the right bucket to fund all your expenses – even surprises and emergencies. And maybe you are that good at budgeting. But if you find yourself regularly dipping in and out of different buckets to make up for shortfalls, it can be time to make some changes to how you allocate your money.

It can be as simple as changing your percentages, or you might look for expenses you can cut back on. You might ask yourself some bigger questions, such as how much rent you should be paying. Ultimately we hope you’ll be inspired to feel more of a sense of control and opportunity. Used properly, a budget can help you really go for it.

The bucket budget is just one method of budgeting. It might take a few goes to find the right buckets for you – or you might find it doesn’t work for you at all. But we think that learning about yourself and your financial behaviours is always a win – and the only way to build a financial life that’s truly rewarding for you.

The information in this article is prepared by Spaceship Capital Limited (ABN 67 621 011 649, AFSL 501605). It is general in nature as it has been prepared without taking account of your objectives, financial situation or needs.


Kelly Simpson is Content Marketing Lead at Spaceship. She loves words, music, football (soccer), and the market.


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