How a Simple Three-Bucket System Made Our Family Budget Easy Again
Just two girls Letting It Be Easy on a sunset cruise last month!
Watching my 13-year-old daughter get her first job this summer was incredible. As she started earning consistent income from her weekly babysitting gig, we had the perfect opportunity to dive into a topic that's often overlooked for young people: money management.
We created a simple three-part system for her to handle her earnings: save, invest, and spend. It’s a tangible way for her to understand how money works, how to build a cushion, and how to put her money to work for her future. Plus, what 13 year old isn’t thrilled to be putting money into a retirement account?! (Jokes - she’s not super happy about it.) The premise is VERY simple: of every paycheck, she moved 25% into her savings account, 50% into her Roth IRA, and kept 25% in her checking account. She has zero expenses at this point in her life, so it’s a great time for her to bulk up her savings, but I’m sure we will revisit these percentages when she’s older and does have expenses.
This simple exercise got me thinking about our own family finances. As a self-employed person with a partner on a W-2, plus all the unexpected income that comes with being an entrepreneur, our financial life can feel less than simple. Josh and I aren't in a position to invest 50% of our income yet (youth sports are expensive!), but over the past few years, we have gotten incredibly intentional with our money.
After years of trying strict budgets, complex spreadsheets, and restrictive "money diets," I realized what we needed was a system that was easy to maintain. I was wasting so much energy tracking every coffee purchase and home goods trip. So, we simplified it. And honestly, it's so simple I almost hesitate to share it, but maybe seeing it spelled out will help you too.
Our Three-Bucket System
This entire system starts with one simple truth: you have to know your numbers. We took a hard look at our income and expenses using an app called Monarch Money. I love Monarch because it automatically tracks every dollar, no matter which card you swipe. It also helped us get a clear picture of our full income, from my monthly ‘paycheck’ from The Coworking House to my side hustles to Josh's W-2 earnings.
Once you have clarity on where your money is going, you can start managing it. We look at our finances through three distinct buckets each month. The key is that while how we manage them might change, the buckets themselves stay the same. This prevents the panicked, "let's redo our entire financial life" feeling every 30 days.
Fixed Expenses: These are the boring but predictable costs: mortgage, car payments, insurance, and utilities. Even if there's money "left over" in this virtual bucket, we know not to touch it because these bills are coming out.
Flexible Expenses: This is where we can flex each month. Do we want to cook at home more and put some cash toward savings? Or are we entering a month of non-stop travel for sports tournaments and need to account for more restaurant spending? It’s all flexible spending. As long as we stay within the total budget for this bucket, it's all good.
Goals: This is where we prioritize saving for rainy days, our kids' college funds, and retirement. Sometimes this bucket gets a huge influx of cash, and sometimes we just put a little in. And to be honest, sometimes I want to put money toward a trip to Italy that I’ve planned down to the minute (but haven't booked yet), and sometimes I’m a responsible adult and throw an extra payment at our credit card. The beauty of this system is that it makes room for both.
This simplified system works because my brain can easily understand that the three buckets have different needs. It's a method inspired by the financial wisdom I've gained from resources like Ramit Sethi's I Will Teach You To Be Rich, Katie Gatti Tassin of Rich Girl Nation, and Denise Duffield-Thomas's Get Rich, Lucky Bitch.
How to Get Started
If this approach sounds like it could work for you, here are a few simple steps to get started:
Audit Your Finances: Start by getting a clear picture of your income and expenses. This is the most crucial step. You have to know what's coming in and what's going out.
Determine Your Buckets: Assign a monthly budget to each of the three buckets (Fixed, Flexible, Goals). Remember to keep your Flexible bucket… well, flexible.
Automate as Much as Possible: Set up automatic transfers for your fixed expenses and your savings goals. This takes the mental load off and ensures you're paying yourself first.
Check In Regularly: The key to an easy system is not to ignore it. I have a calendar reminder set to check our finances every morning, when I first get to the office. It takes 5 minutes to do a once over, and I never get that head-in-the-sand panicky feeling anymore.
If you’re looking for a tool to help, I have been using Monarch Money since 2024 and can genuinely recommend it. Both Josh and I have access to the tool, under one family membership. It's made all the difference in simplifying our finances. If you want to try it out, you can get 50% off your first year with my referral link.
Disclaimer: I am not a financial advisor. This is not financial advice—just what has worked for our family. Please consult with a qualified professional for personalized advice.