Simple Saving: Creating Savings Buckets

Three buckets with coins and one with banknotes
As you know, it is important to save money to prepare for unexpected bills and circumstances. It is highly crucial that you organize your savings and expenditures. According to the CFPB, also known as the Consumer Financial Protection Bureau, people who succeed at saving money maintain savings buckets as an effective saving method. You can have as many buckets as you’d like. Typically, the four most common savings buckets are:

  1. Regular Expenses – Recurring expenses such as quarterly, monthly, or annually bills
  2. Unexpected Expenses – Expenses that do not occur often but you will inevitably have to pay such as car or house maintenance
  3. Emergency Fund – For unforeseen circumstances such as a medical emergency or loss of a job
  4. Financial Goals – For achievement of lifetime goals and dreams such as retiring early or going back to school

According to the CFPB, if you are not covering these four buckets, you are not saving enough for any unpleasant or unexpected events.

Regular Expenses

It is much easier to cover your recurring monthly expenses when you have a good source of income such as paying your utility bills, transportation expenses, or groceries. However, it is understandable that, even after earning your paychecks, you are not able to have any collective savings. This scenario can be frustrating when you are not able to take out extra cash for a holiday trip, birthday celebration, or a little extra shopping. This is a clear sign that you are not saving enough every month. The budget that you create should always account for monthly expenses. If you are earning a good pay check and are still unable to pay for your regular expenses, something is wrong.  Either your monthly expenses are exceeding your income or you are spending too much on the extra stuff. Therefore, it is always best that you account for your recurring expenses and save every month prior to spending on anything else.

Unexpected Expenses

There are so many unexpected bills that can occur at any time. Therefore, you need to have a separate savings account for all of the unexpected expenses. Out of the blue, your car can decide to break down at the end of the month. Perhaps it needs a new clutch or belt. A car is a necessity for your daily traveling needs and you need to immediately fix this issue. One should have a separate savings bucket for these unforeseen events. You should consider opening an “irregular expense fund” within your savings buckets that you can contribute to on a monthly basis to recover such repair costs and other maintenance costs such as these.

Emergency Fund

The most important of all savings is an emergency fund or emergency savings bucket. Losing a job or facing an unexpected medical expense can be a daunting experience as your list of monthly expenses is right in front of you. At that point in time, you wonder if your savings is enough to support your current lifestyle unless you find any better opportunity. However, if you have already set an emergency savings fund, you will have income set aside to support your loss for the time being. According to financial industry experts, a person’s savings should cover at least 3 months of their basic expenses. Hence, consider creating an emergency savings bucket that will benefit you in an uncertain situation. You can even open a separate savings account with your bank in which you can make monthly payments to considering the account as your monthly liability.

Financial Goals

We all strive to achieve our life goals and dreams. All of these achievements not only require time, but they also need money. It is best that you create your financial goals for every age in mind such as your mid-30 goals and retirement years. The consumer financial protection bureau states that a person should separate their earnings to pursue their life goals, even that dream vacation you’ve always hoped for.


By creating these savings buckets for bookkeeping purposes, you will not only have enough income but you will even be able to track and monitor your spending criteria.  The savings buckets will allow you to have peace of mind in terms of monetary pressures as you know you have money saved in your accounts for all of your needs,  planned and unplanned.

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