Three Bucket Budget

While reading a recent Money magazine, I came across a new budgeting technique for personal finances I haven’t heard of it. The magazine called it the Three Bucket Budget.

This budgeting technique involves opening up three accounts at your bank, one savings account, and two checking accounts. When you receive your paycheck, place the amount of money you have to pay to bills in the checking account, the money you would like to save into one of the savings account and the amount you would like to use for entertainment and miscellaneous items in the other checking account. This way, you know what you are spending and don’t have to worry about dipping into the money you are supposed to be saving or using to pay bills.

If you need personal finance organization, this is perfect. Use this technique if you need to see where your money goes but play around with it so that it works for your particular financial situation.

The one thing you have to be true to yourself about is how much you really need to be spending on entertainment. For me, if I put money aside to spend on entertainment, I will spend it all. Even though, I may not have spent that much if I didn’t give myself permission to that much. I think an important question to ask yourself with the entertainment checking account is, “How much do I really need to spend?”

What do you think of this budgeting technique?

(Photo Credit: http://www.flickr.com/photos/mydailycommute/40893069/)

July 24th, 2009 by Marcelina Hardy | Posted in Debt Management | (0)