How to Easily Save Money Each Month Using the Bucket Method

easily save money each month

I’m often asked about what I do to easily save money each month and how I’m doing it successfully.

So I thought I would explain exactly what I’ve done and how I’ve done it.

First and foremost, I’m not a financial advisor. I’ve never even taken a class on personal finance.

My journey to easily saving money each month is based on trial and error (let’s be honest, a lot of error!).

A Little Background

I spent years making good money. The problem is I was racking up just as much debt.

I was on a never-ending cycle of money in and money out. At the end of the day, I had nothing to show for my efforts.

It eventually took a toll on my health, and there came a point where I couldn’t continue working to earn the way I was. My body had had it! It broke down, and I got sick.

My illness forced me to reevaluate what I wanted.

It was then that I decided I didn’t want to continue busting my butt to make money. I wanted to be smarter with my money. 

For years, I ignored advice to fund an emergency savings account. My thought process was, just make more money and you’ll be fine.

You would think I would have started saving right then and there. But no, I didn’t.

Instead, I decided to first get rid of my debt, and then I would save.

Fast forward 2 years later…I was almost done paying off my debt, but the only thing I had to show for it was a lower credit card bill.

I still had no savings. If an emergency came up or I wanted money to go on an impromptu weekend girls’ trip, I had to make more money (work more) to come up with the cash to cover it.

The Energetic Shift toward Financial Freedom

As I said before, finding the sweet spot to easily save money each month took trial and error.

My tunnel vision paying down debt without saving was detrimental. It caused me to get into more debt because when my dog got sick or something unexpected happened, I had to use credit cards to pay for it.

One day I had enough of the struggle, and I decided to pay myself first. Before I paid my bills, I set money aside for savings.

This was the game changer. And my ticket to financial freedom.

It radically changed my life and my financial future. It changed how I interact with money…and how I spend it.

And since creating and funding an emergency savings account, I have not had to worry about money.

What’s more, friends who’ve followed in my footsteps no longer live paycheck to paycheck.

I started with saving 10% of my income, and gradually increased the amount to 15%, 20%, 25%.

Now, I save anywhere from 35% – 42% of my monthly income.

Easily Save Money Each Month: Bucket Your Savings

When I first started seriously saving, I opened up a high-yield savings account. Each time I got paid, I put 10% of my income into that account. 

As the balance grew – and the amount I contributed increased – I knew my money could work FOR ME better if I invested it. 

So, I reviewed my goals and objectives for the following 3 years and decided to bucket my savings. 

Here’s the breakdown of my 5 savings buckets:  

  1. Retirement 
  2. Emergency
  3. Investments
  4. Fun Money
  5. Big-Ticket Purchases 

I have a separate account for each of these buckets. Doing so helps me easily track my progress.

I don’t always fund each bucket the same. Depending on what my objectives are for a specific period of time, I reallocate more money toward a certain bucket.

For example, when the crypto market dropped in March due to the lockdown, I put most of my savings into the investment bucket in order to buy more at a lower price.

When Bitcoin and other Altcoins pumped a few months later, I pulled back on funding the investment bucket. Instead, I put more money into my emergency, retirement, and big-ticket purchases buckets.

Here’s the bucket breakdown to help you easily save money each month.

Savings Bucket #1: Save for Retirement

The first bucket is retirement.

I have a Roth IRA that I can contribute $6,000 to each year. If you divide that by 12 months, that’s $500 monthly, and I have it automated so I don’t have to think about funding this bucket.

If you have a traditional or Roth IRA, make sure you set it up to automatically withdraw from your account.

Doing so helps you avoid the temptation to save less or spend more…and it’s an easy-breezy way to easily save each month.

If you have a 401(k) or other workplace retirement account with your employer, your retirement contribution is automatically taken out of each paycheck.

One way to easily save money each month is to contribute at least the company match – or the amount of money your employer will put into your 401(k) each year for you.

Meeting the company match is basically like getting free money, and it will help your account grow quicker. If you don’t know how much your company matches, contact HR as soon as possible.

If you are self-employed and have a Solo 401(k) – also referred to as a Self-Employed 401(k) or Individual 401(k) – or a SEP IRA, money is automatically taken out each pay period. So you’re covered there.

One final note on retirement savings: do what you can to meet the contribution limits each year.

Even contributing an extra 1%, 3%, or 5% each year can make a big impact on your retirement future.

Savings Bucket #2: Save for an Emergency

You’ll hear experts say that an emergency fund should be a savings of 3 to 6 months of living expenses. Some advise more.

Originally, I had mine set for 3 months. I started with contributing $1,000 each month to this bucket.

When I reached my 3-month goal, I bumped it up to 5 months and pulled back my monthly contribution to $500 a month. Full transparency, I’m still working on completing this goal.

The point of this account is that life happens and unexpected things come up all the time.

What if, all of a sudden, a really good friend or family member gets sick, and I need to hop on a flight?

What if I accidentally sit on my eyeglasses, and it’s not covered by insurance? (Been known to happen.)

With an emergency fund, I can buy the flight quickly without worrying what’s in my checking account. I won’t have to go into debt to buy my new pair of glasses.

Plus, I don’t have to put it on a credit card. Although now I could put it on a credit card and instantly pay it off. (Pat on the back.)

[Related Read: 5 Ways to Use a Credit Card Wisely]

I’m not going into debt to pay for these emergencies.

Funny thing: since I have focused on having an emergency fund, very few emergencies arise.

Or at least they don’t feel like emergencies anymore because I can handle it.

Dipping into this account for a weekend on the beach or a great Amazon order is not what this is for.

I use this account for dire necessities only, and I put it back in as fast as I can. I make it a priority.

This, my friends, is peace of mind.

Savings Bucket #3: Save for Investments

While contributions to this bucket fluctuate each month, I do invest money each month so my money grows for me.

When the crypto market took a dive this past March, right after the lockdown, my attention went into investment.

Instead of going heavy on my other savings funds, I decided to give this bucket a lot of love.

I put everything I had into Bitcoin, Etherium, and a few other defi tokens, and I bought low.

Your investment journey does not have to look exactly like mine. The thing to remember is that it’s not a “get rich quick” method, but a long-haul look toward financial growth.

And you don’t have to start with a big amount; you can start small.

Whether you lean into the stock market, gold and other precious metals, or cryptocurrency, you can go at a pace and amount that feels comfortable to you.

Before jumping in though, make sure you have a system and strategy in place. The last thing you want to do is lose money due to lack of planning.

Savings Bucket #4: Save to Spend (Fun Money)

My fourth bucket is saving to spend. This is to cover nonessential expenses. It’s fun money.

I have a goal of $5,000 in this account although, at the moment, I’m contributing $100 to it. It’s not a big priority for me right now, but every month I faithfully put that amount in.

I pull from this bucket when I want to go for a spa day, buy new clothes, or take a weekend trip with friends.

Maybe for you, it’s buying yourself flowers or signing up for an online course on macrame making. Your fun activities are paid for with this account.

Remember, not everything has to come out of your checking account. Having separate buckets like this helps you organize and be mindful with your money.

To determine just how much goes into the fun account, take a look at how much you make. Then, take into account your living expenses, any debt you have, and retirement and emergency savings, and then determine how much you can fund this bucket.

Saving Bucket #5: Save for Big-Ticket Items

When it comes to saving for big-ticket items, the main thing is to plan, plan, plan. Doing this alone can easily save money each month.

Make a list of the things you know will cost a pretty penny, and then prioritize. With clear price tags in mind, you can create realistic savings goals.

Whether it’s upgrading your living room, planning for a 40th birthday party, or taking an expensive safari, you need to know about how much each will cost and then save accordingly.

Personally, I am not funding this bucket right now since I don’t plan to travel or make a big purchase.

But, if I were to want a new car or house, I would save monthly for it in this bucket and keep it separate from the others.

This keeps me from dipping into other buckets, or worse, getting into debt to fund bigger ticket items.

This bucket system works. I’ve experienced it firsthand. You can, too.

Whether you’re saving 5%, 10%, 25%, or even 50%, you have to start somewhere.

Take that portion of your income and divide it into these buckets. A plan like this is sustainable and helps you easily save money each month.

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Disclaimer: I am not a financial planner or expert. All information in the post is my opinion and should not be used as financial advice. This is based solely on my experiences. Any action you take based on the recommendations from this blog is at your discretion. This post contains some affiliate links. If you click on an affiliate link and purchase a product/service, I may receive a small commission at no extra cost to you. However, I only recommend products, services, and/or businesses that I love and believe will add value to you.

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