how many use buckets?

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bobblershead
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how many use buckets?

Post by bobblershead »

just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
jebmke
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Re: how many use buckets?

Post by jebmke »

I do not use buckets. If I need money, I sell something.
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David Jay
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Re: how many use buckets?

Post by David Jay »

You can do "buckets" in a spreadsheet without the necessity of separate accounts.

What is important is having a budget and using it to prioritize your financial goals.
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Mike Scott
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Re: how many use buckets?

Post by Mike Scott »

I don't if you are talking about separate accounts for each but you can if you want.
brawlrats
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Re: how many use buckets?

Post by brawlrats »

I do not use buckets.

My FIL does, though, from his days working at a non-profit debt counseling agency (one of the legit ones :happy ). He has completely succumbed to spending paralysis because of the buckets and is unwilling to move money between buckets if needed. It drives my MIL and wife crazy, to the point my MIL set up new accounts for herself so she can spend money without getting the 10th degree of questioning.
Last edited by brawlrats on Tue Nov 22, 2022 10:35 am, edited 1 time in total.
nolesrule
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Re: how many use buckets?

Post by nolesrule »

I have a hybrid approach. i use YNAB's envelope budget but include my investment account in the total money. I keep a specific amount in cash. This let's me see how much of my investment money is tied up for earmarked spending vs. what's available for eventual financial independence (retirement) without the need for separate investment accounts.
punkinhead
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Re: how many use buckets?

Post by punkinhead »

I've never been able to figure out buckets. A few times over the years I've read articles about it but could never get my head around why I wouldn't just pick an asset allocation and rebalance as necessary.
homebuyer6426
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Re: how many use buckets?

Post by homebuyer6426 »

I thought this was going to be a thread about plastic buckets. Was ready to tell you all about how useful they are around the house.

Yes, for example I have a bucket I filled with CDs and money market for my wife's college, since it's going to be a relatively near-term and predictable expense. She is waiting to get a year of residency in this state for the lower tuition rate. We set it up as a joint account and she can use a debit card to draw directly from the money market portion if she needs to buy something and her other cards aren't working.

If I just had expenses for myself I'd put everything in one account.
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bengal22
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Re: how many use buckets?

Post by bengal22 »

I have a bucket just for "rainy days."
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

brawlrats wrote: Tue Nov 22, 2022 10:33 am I do not use buckets.

My FIL does, though, from his days working at a non-profit debt counseling agency (one of the legit ones :happy ). He has completely succumbed to spending paralysis because of the buckets and is unwilling to move money between buckets if needed. It drives my MIL and wife crazy, to the point my MIL set up new accounts for herself so she can spend money without getting the 10th degree of questioning.
do you think without his discipline she'd have the discretionary funds to spend that way?
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Re: how many use buckets?

Post by sailaway »

As above, sinking funds don't have to be in separate accounts. I agree they are an important planning tool, but I just never found a way I liked to track it all. For one thing, when Mint told me I had $150 for clothes I didn't want, but nothing for the car, which needed an oil change, it really stressed me out. I found I was happier with it all lumped together, even when my budget was pretty tight. Perhaps especially when my budget was really tight and I needed to skimp in one area to meet an obligation in a separate area.
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

homebuyer6426 wrote: Tue Nov 22, 2022 10:38 am I thought this was going to be a thread about plastic buckets. Was ready to tell you all about how useful they are around the house.

Yes, for example I have a bucket I filled with CDs and money market for my wife's college, since it's going to be a relatively near-term and predictable expense. She is waiting to get a year of residency in this state for the lower tuition rate. We set it up as a joint account and she can use a debit card to draw directly from the money market portion if she needs to buy something and her other cards aren't working.

If I just had expenses for myself I'd put everything in one account.
yeah, old 5 gallons are great, strangely expensive to buy empty though : )

for $ buckets, yeah, that make sense, thanks. bucket for near term, not at risk.
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Re: how many use buckets?

Post by guppyguy »

nolesrule wrote: Tue Nov 22, 2022 10:34 am I have a hybrid approach. i use YNAB's envelope budget but include my investment account in the total money. I keep a specific amount in cash. This let's me see how much of my investment money is tied up for earmarked spending vs. what's available for eventual financial independence (retirement) without the need for separate investment accounts.
I presume your investment accounts are set up as "tracking" in YNAB?
brawlrats
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Re: how many use buckets?

Post by brawlrats »

bobblershead wrote: Tue Nov 22, 2022 10:39 am
brawlrats wrote: Tue Nov 22, 2022 10:33 am I do not use buckets.

My FIL does, though, from his days working at a non-profit debt counseling agency (one of the legit ones :happy ). He has completely succumbed to spending paralysis because of the buckets and is unwilling to move money between buckets if needed. It drives my MIL and wife crazy, to the point my MIL set up new accounts for herself so she can spend money without getting the 10th degree of questioning.
do you think without his discipline she'd have the discretionary funds to spend that way?
Spend what way? Your question seems loaded with assumptions.
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

David Jay wrote: Tue Nov 22, 2022 10:31 am You can do "buckets" in a spreadsheet without the necessity of separate accounts.

What is important is having a budget and using it to prioritize your financial goals.
i did buckets in different accounts, with different risk profiles based on expected need date of money, but rethinking it and considering simplifying.
nolesrule
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Re: how many use buckets?

Post by nolesrule »

guppyguy wrote: Tue Nov 22, 2022 10:44 am
nolesrule wrote: Tue Nov 22, 2022 10:34 am I have a hybrid approach. i use YNAB's envelope budget but include my investment account in the total money. I keep a specific amount in cash. This let's me see how much of my investment money is tied up for earmarked spending vs. what's available for eventual financial independence (retirement) without the need for separate investment accounts.
I presume your investment accounts are set up as "tracking" in YNAB?
Nope. Can't keep budget money in an investment account and be able to track amounts for each 'envelope" if the account is a tracking account.

So it's a budget account. I have a category in my budget that holds the balance of funds not needed by other budget categories, and it's also used for monthly balance adjustments to absorb gains/losses.

I use YNAB's API to pull data into google sheets so it runs my calculations for me on whether I can add money to the investment account or need to let cash build back up.
MathWizard
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Re: how many use buckets?

Post by MathWizard »

I use a savings account in a local credit union as a short term fund.

This has had anywhere from $5K to 40K in it, the largest being when I had exhausted all tax advantaged space early in the year.

It is where I pull money for vacations from.
DeliberateDonkey
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Re: how many use buckets?

Post by DeliberateDonkey »

I don't, but I can see why people do. For me, even the idea of budgeting strikes me as a process that can sometimes push or at least permit you to overspend. After all, if I've budgeted a certain amount for a car payment (or put a certain amount in that bucket), why spend less? Similarly, what are the rules for transfers between buckets when priorities change, and if there are no rules, what use to the buckets really serve? On the flip side, being consistently frugal about every purchase can lead to being penny-wise and pound-foolish, losing sight of long-term goals, or even missing the boat on opportunities that make the whole process of earning money worthwhile.

Ultimately, I would advocate for folks to do what works best for them, as I don't think there's one way that's right for everyone. Buckets definitely help with goal-setting, offer a sense of accomplishment, and by their nature, require you to have plans for your money, rather than accumulating for the sake of it. Reading that back, maybe I should be using them after all! :D
LittleMaggieMae
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Re: how many use buckets?

Post by LittleMaggieMae »

I've never really been clear on what people mean when they use "buckets" with financial stuff.

For any money I will spend in a year (or two) I use a "budget/spending plan" - basically it's a list of all of my expenses especially the "known" bills like house/car insurance, property tax, house repair, pet repair (vet bills for 2 cats), hobby savings, season tickets, vacation, holiday spending, whatever else I'm "saving up" for. I don't agonize over getting the exact amount I spend on electric, natural gas, groceries, etc each month. It varies seasonally. For groceries I try not to spend more than a "fixed" amount - based on previous years spending (which isn't working so well since inflation has hit hard and fast after nearly a 10 years of little change in my grocery spending).

I transfer the "not gonna need to spend that money until some point in the future" money to an account.

Since many of the the numbers were a monthly fixed amount (1/12th of an expected expense). It's a fixed X dollars per month (or paycheck). I used a notebook to keep track of all of this inflow of money and also the bill amounts and outflows when they happened. Eventually as my financial life got more complicated (more lumpy expenses and BIGGER lumpy expenses) I started using a spreadsheet to help me track how much I had "saved up to spend" for each line item.

A couple of years ago I opened an Ally account - because it lets me break out my total into "categories" so I can keep visual track of all the money I need to "save up to spend it". And I don't have to update a spreadsheet (and check the balance of my account(s)).

I realized what I actually have are a lot of "sinking funds" - money I need to save up to spend at some point. :)

Not sure if my Ally account is one "bucket" or lots of "buckets" I think of it as a fund of sinking funds. :)
Last edited by LittleMaggieMae on Tue Nov 22, 2022 11:17 am, edited 3 times in total.
Dandy
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Re: how many use buckets?

Post by Dandy »

I'm almost 75 and our income almost equals our normal monthly expenses. That will be less so if I die before my wife. So, she will need more income due to the loss of half my pension, her SS (mine is larger) and filing taxes single instead of joint.

So I made a rough estimate of what she would need extra each year. I put that yearly amount X the number of years for her to reach age 90 in "safe" fixed income e.g. Savings Accounts, Money Markets, CDs, and short term bond funds. That makes our overall fixed income allocation 50% "safe fixed income and 50% intermediate bonds (most as a part of balanced funds).

Every year or so I give that a rough review.
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Re: how many use buckets?

Post by Grt2bOutdoors »

I use a bucket to store tinder.
I use accounts to hold financial assets.
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CyclingDuo
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Re: how many use buckets?

Post by CyclingDuo »

bobblershead wrote: Tue Nov 22, 2022 10:26 am just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
Bucket strategy could be used in accumulation regarding having a mix of duration due dates ranging from a shorter duration in terms of when the spend will occur, as well as some that might be more of an intermediate term (annual vacation being shorter duration, replacing a car usually being a certain number of years say 5, 7, 10, etc., replacing the roof on your house in XX years, and on and on).

Those also happen in the retirement phase. If we look at the bucket strategy regarding retirement planning.

In terms of financial planning for retirement, I don't mind the idea/concept of thinking in "buckets" regarding time frame as illustrated below (it's in JP Morgan's annual retirement guide)...

Image
https://am.jpmorgan.com/content/dam/jpm ... ent-us.pdf

Ties in with the portfolio structure based on hierarchy of needs - or for investor goals - in retirement as well...

Image
https://am.jpmorgan.com/content/dam/jpm ... ent-us.pdf

Boglehead Conference 2022 speakers Christine Benz and Rob Berger discuss the bucket strategy in the latter half of the interview here:

https://www.youtube.com/watch?v=96GH3pW2wVU

Christine talks with StanTheAnnuityMan on the bucket strategy here...

https://www.youtube.com/watch?v=XUxN7tUFTOE

Christine also talks with Douglas Goldstein here about the bucket strategy...

https://www.youtube.com/watch?v=q8hJoUKlrqE

Michael Kitces writes about bucket vs total return here...

https://www.financial-planning.com/conf ... l-advisors

https://www.kitces.com/blog/managing-se ... -approach/

We've thought about it all regarding retirement income streams and spending from the portfolio, but have yet to implement the actual retirement withdrawal phase as that is coming in the future for us. In terms of during the accumulation phase, we just use a slush fund savings account for our cash bucket to fund shorter term things such as vacation, new cars, home repairs, etc... . We have an automatic deposit into the savings account that is bi-weekly from the bank account that are set based on when the paychecks arrive. Automation tends to work best for us.

CyclingDuo
Last edited by CyclingDuo on Tue Nov 22, 2022 11:19 am, edited 1 time in total.
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case_of_ennui
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Re: how many use buckets?

Post by case_of_ennui »

I have a bunch of different buckets. One bucket is a Treasury Direct account. One bucket is a taxable account. Another is a 401k. The last bucket I use is a Roth IRA. Some buckets are for retirement. Some are for an emergency fund. Etc.
guppyguy
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Re: how many use buckets?

Post by guppyguy »

nolesrule wrote: Tue Nov 22, 2022 10:50 am
guppyguy wrote: Tue Nov 22, 2022 10:44 am
nolesrule wrote: Tue Nov 22, 2022 10:34 am I have a hybrid approach. i use YNAB's envelope budget but include my investment account in the total money. I keep a specific amount in cash. This let's me see how much of my investment money is tied up for earmarked spending vs. what's available for eventual financial independence (retirement) without the need for separate investment accounts.
I presume your investment accounts are set up as "tracking" in YNAB?
Nope. Can't keep budget money in an investment account and be able to track amounts for each 'envelope" if the account is a tracking account.

So it's a budget account. I have a category in my budget that holds the balance of funds not needed by other budget categories, and it's also used for monthly balance adjustments to absorb gains/losses.

I use YNAB's API to pull data into google sheets so it runs my calculations for me on whether I can add money to the investment account or need to let cash build back up.
Interesting. So you budget with the specified cash amount in the account but have another envelope that tracks the investment (fluctuating)?

I have a brokerage account I'm using for T-bill purchases which takes the place of the HYSA. This is where the bulk of our 6 months of expenses are kept, in addition to a checking account. I track the cash portion and just reconcile when a T-bill matures. Longer term investments are tracking only. Its this middle area that straddles both where it gets muddy.

Wish YNAB would someday be sophisticated enough to track this. Which API's are you using? I've only played around with ToolKit.
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WoodSpinner
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Re: how many use buckets?

Post by WoodSpinner »

bobblershead wrote: Tue Nov 22, 2022 10:26 am just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
I certainly did during accumulation! Automated it all to enforce savings from my paycheck. I found it really helpful for managing these future expenses and any trade offs that came up.

Fortunately my Credit Union allowed sub-accounts which made it all much easier to manage.

WoodSpinner
nolesrule
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Re: how many use buckets?

Post by nolesrule »

guppyguy wrote: Tue Nov 22, 2022 11:33 am
Wish YNAB would someday be sophisticated enough to track this. Which API's are you using? I've only played around with ToolKit.
YNAB has its own API, so I can use it to get data about my budget. Accounts, categories, etc. I retrieve the ones I need and then the spreadsheet crunches the numbers. The only manual input I have is in figuring out the amount of cash I want to hold, as well as any categories I want to ignore from the cash holding (like money for my kids that hasn't been transferred to them yet).
Onlineid3089
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Re: how many use buckets?

Post by Onlineid3089 »

In our household buckets are for gardening and such, not for finances :beer

But seriously, we do not have separate cash accounts, whether real or mentally dividing up one account, for home repairs, car replacement, etc. We just have cash and it is available for whatever need or want arises. It is probably easier to do that given that neither me nor my wife are spenders.
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Re: how many use buckets?

Post by nisiprius »

For cash managements and savings, we have used and do use buckets, and they are separate accounts--often at the same bank so that money can be moved between them instantaneously.

I once tried doing it "with a spreadsheet" and it didn't work.

I can't speak for others, but my spouse and I find that we tend to regulate or spending based on our checking account balance. It's illogical, but it is so.

Buckets used this way are not a financial tool, they are some kind of memory tool that helps me remember what my plan was. Years ago, when we had paid off a car loan, I arranged for an automatic transfer of the same monthly amount into a dedicated "car replacement fund" savings account. The amount flowing into the checking account remained the same. Theoretically, we could have "just remembered" that now that the car loan was paid off, we needed not to regulate our spendings to our savings account balance. We could have done it with a spreadsheet. I can only say what works for us.

As an investment strategy, e.g. Ray Lucia's "Buckets of Money," I do not think it's a good idea. I think it is actually slightly dangerous, because it typically relies on the idea that you know the maximum (or typical or average) length of a bear market, and that you know how many years of cash you need to "ride through a bear market." It's often as short as three years. Nobody ever explains exactly what you if the unthinkable happens, and you empty the cash bucket. There have been a couple of back-to-back long bear markets in the US, and nobody explains what you do if another bear market hits before you are able to replenish the cash bucket.
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MGBMartin
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Re: how many use buckets?

Post by MGBMartin »

I don’t use separate accounts or earmark certain funds for specific purposes.
What I do is keep mental buckets.
If I have any investment that pays $400 per year dividends I like to think that is paying the cell phone bill for the mrs and I.
Same thing for other bills like water, electric etc.
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ETCS10
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Re: how many use buckets?

Post by ETCS10 »

When I first moved out on my own I used physical envelopes with cash for budgeting. That taught me to not only live when my means but helped with investing. Over time self discipline was engrained and the the envelopes morphed into investment buckets for larger ticket items like vacations, vehicles, housing, etc... I didn't have individual investments for each bucket category but used a spreadsheet to designate the funds in our taxable accounts. Since retiring the buckets categories have disappeared on the spreadsheet and we are learning to spend.
secondopinion
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Re: how many use buckets?

Post by secondopinion »

bobblershead wrote: Tue Nov 22, 2022 10:26 am just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
Not really. I just set aside a reasonable stash (in a HYSA and treasury bills) for both emergencies and normal expenses, and invest the rest.
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BrooklynInvest
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Re: how many use buckets?

Post by BrooklynInvest »

Yes. My retire early plan warranted it... to me.

All my 401k assets are 60-40 and my taxable account was all legacy equity index ETFs - Qs, SPY, DIA (all bought before I went full b-head and expensive to sell). Figure I was 80-20 which was admittedly too aggressive, but I'd planed to dial down the relative equity exposure with new money as I moved towards retirement.

When I realized retirement at 55 was a possibility I added 60-40 to my taxable - not necessarily efficient (although in a low rate world not bad) but I needed 60-40 stability (I know!) outside my 401k equal to about 5 years of expenses which would get me to 59 1/2.

I suppose I could have added FI only and used my equity ETFs as the "60" but this was simpler to me.
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

brawlrats wrote: Tue Nov 22, 2022 10:48 am
bobblershead wrote: Tue Nov 22, 2022 10:39 am
brawlrats wrote: Tue Nov 22, 2022 10:33 am I do not use buckets.

My FIL does, though, from his days working at a non-profit debt counseling agency (one of the legit ones :happy ). He has completely succumbed to spending paralysis because of the buckets and is unwilling to move money between buckets if needed. It drives my MIL and wife crazy, to the point my MIL set up new accounts for herself so she can spend money without getting the 10th degree of questioning.
do you think without his discipline she'd have the discretionary funds to spend that way?
Spend what way? Your question seems loaded with assumptions.
yeah, a lot of assumptions made. said another way, I'm assuming his bucket strategy worked over the years and allowed there to be funds available to them without having to watch so close bucket by bucket. I was wondering if you thought without his buckets would they be in a different situation as far as funds available now? e.g, was it worth the hassle?
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

CyclingDuo wrote: Tue Nov 22, 2022 11:14 am
bobblershead wrote: Tue Nov 22, 2022 10:26 am just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
Bucket strategy could be used in accumulation regarding having a mix of duration due dates ranging from a shorter duration in terms of when the spend will occur, as well as some that might be more of an intermediate term (annual vacation being shorter duration, replacing a car usually being a certain number of years say 5, 7, 10, etc., replacing the roof on your house in XX years, and on and on).

Those also happen in the retirement phase. If we look at the bucket strategy regarding retirement planning.

In terms of financial planning for retirement, I don't mind the idea/concept of thinking in "buckets" regarding time frame as illustrated below (it's in JP Morgan's annual retirement guide)...

Image
https://am.jpmorgan.com/content/dam/jpm ... ent-us.pdf

Ties in with the portfolio structure based on hierarchy of needs - or for investor goals - in retirement as well...

Image
https://am.jpmorgan.com/content/dam/jpm ... ent-us.pdf

Boglehead Conference 2022 speakers Christine Benz and Rob Berger discuss the bucket strategy in the latter half of the interview here:

https://www.youtube.com/watch?v=96GH3pW2wVU

Christine talks with StanTheAnnuityMan on the bucket strategy here...

https://www.youtube.com/watch?v=XUxN7tUFTOE

Christine also talks with Douglas Goldstein here about the bucket strategy...

https://www.youtube.com/watch?v=q8hJoUKlrqE

Michael Kitces writes about bucket vs total return here...

https://www.financial-planning.com/conf ... l-advisors

https://www.kitces.com/blog/managing-se ... -approach/

We've thought about it all regarding retirement income streams and spending from the portfolio, but have yet to implement the actual retirement withdrawal phase as that is coming in the future for us. In terms of during the accumulation phase, we just use a slush fund savings account for our cash bucket to fund shorter term things such as vacation, new cars, home repairs, etc... . We have an automatic deposit into the savings account that is bi-weekly from the bank account that are set based on when the paychecks arrive. Automation tends to work best for us.

CyclingDuo
thanks, so new car comes from cash slush fund, interesting, thanks.
those were good graphics, and was how i was thinking of them, thanks for the article links, will check them out.
Last edited by bobblershead on Tue Nov 22, 2022 1:37 pm, edited 1 time in total.
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Kenkat
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Re: how many use buckets?

Post by Kenkat »

bobblershead wrote: Tue Nov 22, 2022 10:49 am
David Jay wrote: Tue Nov 22, 2022 10:31 am You can do "buckets" in a spreadsheet without the necessity of separate accounts.

What is important is having a budget and using it to prioritize your financial goals.
i did buckets in different accounts, with different risk profiles based on expected need date of money, but rethinking it and considering simplifying.
I have a “bucket” to fund the next 11 years of retirement until I reach age 70 and begin taking social security. That is invested fairly conservatively at 30/70. I plan to exhaust all of that money by the time I hit 70. Maybe there’s a little left or maybe I have to supplement a little, but it’s (hopefully) close.

I have a second bucket which is basically everything else invested at 70/30 since I do not need to use those funds in the near to intermediate term.

Simplicity can be good or a bucket approach can be good, whatever works for you. I will add that if you know you need some set amount of money in a given time frame, you are going to have to account for that somehow. In my situation I could have probably done something like 50/50 overall and achieve the same basic result. This would potentially entail me selling certain investments at less than optimal times, but I could also rebalance and “buy them back” to offset this. Bottom line, whatever works for you is probably fine.
Last edited by Kenkat on Tue Nov 22, 2022 1:25 pm, edited 1 time in total.
brawlrats
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Re: how many use buckets?

Post by brawlrats »

bobblershead wrote: Tue Nov 22, 2022 1:12 pm
brawlrats wrote: Tue Nov 22, 2022 10:48 am
Spend what way? Your question seems loaded with assumptions.
yeah, a lot of assumptions made. said another way, I'm assuming his bucket strategy worked over the years and allowed there to be funds available to them without having to watch so close bucket by bucket. I was wondering if you thought without his buckets would they be in a different situation as far as funds available now? e.g, was it worth the hassle?
They both worked (though my MIL just retired) and both made money. She wanted to be able spend some of the money she earned how she wanted to without argument. That's all. Their financial situation was and is just fine regardless of his buckets and resulting spending paralysis.

My initial reply was simply a comment on how the budgeting bucket approach negatively impacts some people. I don't doubt the bucket approach helps some people, particularly those with habitual spending issues or significant CC debts.
Last edited by brawlrats on Tue Nov 22, 2022 1:50 pm, edited 1 time in total.
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

ETCS10 wrote: Tue Nov 22, 2022 12:37 pm When I first moved out on my own I used physical envelopes with cash for budgeting. That taught me to not only live when my means but helped with investing. Over time self discipline was engrained and the the envelopes morphed into investment buckets for larger ticket items like vacations, vehicles, housing, etc... I didn't have individual investments for each bucket category but used a spreadsheet to designate the funds in our taxable accounts. Since retiring the buckets categories have disappeared on the spreadsheet and we are learning to spend.
the envelopes method for spending then saving, we did this too, using real paper seems to make it more real, eventually the lesson was learned and moved away from it. but i was meaning buckets to save in, after the expenses are sorted.
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

secondopinion wrote: Tue Nov 22, 2022 12:43 pm
bobblershead wrote: Tue Nov 22, 2022 10:26 am just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
Not really. I just set aside a reasonable stash (in a HYSA and treasury bills) for both emergencies and normal expenses, and invest the rest.
t-bills are on my to-do list to understand/consider. currently using i-bonds with the idea to have a lot saved in i-bonds to cover first years of retirement expense if market is down.
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

brawlrats wrote: Tue Nov 22, 2022 1:23 pm
bobblershead wrote: Tue Nov 22, 2022 1:12 pm
brawlrats wrote: Tue Nov 22, 2022 10:48 am
Spend what way? Your question seems loaded with assumptions.
yeah, a lot of assumptions made. said another way, I'm assuming his bucket strategy worked over the years and allowed there to be funds available to them without having to watch so close bucket by bucket. I was wondering if you thought without his buckets would they be in a different situation as far as funds available now? e.g, was it worth the hassle?
They both worked (though my MIL just retired) and both made money. She wanted to be able spend some of the money she earned how she wanted to without argument. That's all. Their financial situation was and is just fine regardless of his buckets and resulting spending paralysis.

My initial reply was simply a comment on how the budgeting bucket approach impacts negatively impacts some people. I don't doubt the bucket approach helps some people, particularly those with habitual spending issues or significant CC debts.
i think the bucket or envelopes methods can both lead some people into miser mode.
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LilyFleur
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Re: how many use buckets?

Post by LilyFleur »

Once a month (after my pension check hits my main checking account), I have an automatic transfer set up to move $s to separate checking accounts for property taxes, condo insurance, car insurance, credit cards, and HOAs (for example, I put $290 a month into my property taxes account). I pay those bills out of their own individual accounts (the accounts are free).

This way none of this creditors have my main checking account number.

I'm retired, and in 2020 I moved a portion of my 401k into a stable value fund so that if bonds and stocks are in a down market, I can withdraw from the stable value fund for a portion of my spending.

I guess you might call those "buckets." It works for me.
secondopinion
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Re: how many use buckets?

Post by secondopinion »

bobblershead wrote: Tue Nov 22, 2022 1:29 pm
secondopinion wrote: Tue Nov 22, 2022 12:43 pm
bobblershead wrote: Tue Nov 22, 2022 10:26 am just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
Not really. I just set aside a reasonable stash (in a HYSA and treasury bills) for both emergencies and normal expenses, and invest the rest.
t-bills are on my to-do list to understand/consider. currently using i-bonds with the idea to have a lot saved in i-bonds to cover first years of retirement expense if market is down.
Seems like a good idea.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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White Coat Investor
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Re: how many use buckets?

Post by White Coat Investor »

bobblershead wrote: Tue Nov 22, 2022 10:26 am just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
Never did use buckets in that way. I used to keep the buckets separate on a spreadsheet, but all in one account. Now we don't keep any of those accounts because we can pay for all of them out of monthly earnings in any given month. If we need to buy a car one month, we simply save/invest less and give less away that month.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Bama12
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Re: how many use buckets?

Post by Bama12 »

bobblershead wrote: Tue Nov 22, 2022 10:26 am just wondering how many of you use buckets to save for different things?

such as
- a new car fund
- a vacation fund
- an e-fund
- etc.
vs just putting all the funds in a single account and pull from it as needed?
I don't have anything listed as a bucket on my spread sheet but.....

Spending in checking- Vacation and fun
Savings- E-Fund
Brokerages- Retirement early
401k- Retirement 62-64
Roth- Retirement 65 plus
Roth- Pass to my son
brawlrats
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Re: how many use buckets?

Post by brawlrats »

bobblershead wrote: Tue Nov 22, 2022 1:34 pm
brawlrats wrote: Tue Nov 22, 2022 1:23 pm
They both worked (though my MIL just retired) and both made money. She wanted to be able spend some of the money she earned how she wanted to without argument. That's all. Their financial situation was and is just fine regardless of his buckets and resulting spending paralysis.

My initial reply was simply a comment on how the budgeting bucket approach impacts negatively impacts some people. I don't doubt the bucket approach helps some people, particularly those with habitual spending issues or significant CC debts.
i think the bucket or envelopes methods can both lead some people into miser mode.
Most definitely, and that was the case here. He'll sit with $25,000 in a new car bucket with no need for a car in sight, but refuse to take from that bucket to fund another necessary expenditure, then live like a pauper to make up for it. In his defense, his parents were depression era children, and they maintained their incredibly frugal habits (e.g., bringing a half eaten roll home from a restaurant, folding and reusing napkins, gift wrap, etc.) throughout my FIL's childhood, so it is ingrained in him.
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LilyFleur
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Re: how many use buckets?

Post by LilyFleur »

bobblershead wrote: Tue Nov 22, 2022 1:34 pm
brawlrats wrote: Tue Nov 22, 2022 1:23 pm
bobblershead wrote: Tue Nov 22, 2022 1:12 pm
brawlrats wrote: Tue Nov 22, 2022 10:48 am
Spend what way? Your question seems loaded with assumptions.
yeah, a lot of assumptions made. said another way, I'm assuming his bucket strategy worked over the years and allowed there to be funds available to them without having to watch so close bucket by bucket. I was wondering if you thought without his buckets would they be in a different situation as far as funds available now? e.g, was it worth the hassle?
They both worked (though my MIL just retired) and both made money. She wanted to be able spend some of the money she earned how she wanted to without argument. That's all. Their financial situation was and is just fine regardless of his buckets and resulting spending paralysis.

My initial reply was simply a comment on how the budgeting bucket approach impacts negatively impacts some people. I don't doubt the bucket approach helps some people, particularly those with habitual spending issues or significant CC debts.
i think the bucket or envelopes methods can both lead some people into miser mode.
I was married to one.
I think the misers will find whatever method that enables their fearful behavior. Buckets or envelopes can be one of those methods, as can a strict budget on a spreadsheet that can be waved around in the air. :mrgreen:
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bobblershead
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Re: how many use buckets?

Post by bobblershead »

LilyFleur wrote: Tue Nov 22, 2022 1:35 pm Once a month (after my pension check hits my main checking account), I have an automatic transfer set up to move $s to separate checking accounts for property taxes, condo insurance, car insurance, credit cards, and HOAs (for example, I put $290 a month into my property taxes account). I pay those bills out of their own individual accounts (the accounts are free).

This way none of this creditors have my main checking account number.

I'm retired, and in 2020 I moved a portion of my 401k into a stable value fund so that if bonds and stocks are in a down market, I can withdraw from the stable value fund for a portion of my spending.

I guess you might call those "buckets." It works for me.
hi, yes i do something similar for those yearly bills, but virtually in software, the money is in one account, but i do pre save for the yearly bill. did you have an issue with a creditor taking from your account that warrants the separate accounts, or just like to be cautious?
BrownEyedGirl_27
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Re: how many use buckets?

Post by BrownEyedGirl_27 »

LittleMaggieMae wrote: Tue Nov 22, 2022 10:53 am I've never really been clear on what people mean when they use "buckets" with financial stuff.

For any money I will spend in a year (or two) I use a "budget/spending plan" - basically it's a list of all of my expenses especially the "known" bills like house/car insurance, property tax, house repair, pet repair (vet bills for 2 cats), hobby savings, season tickets, vacation, holiday spending, whatever else I'm "saving up" for. I don't agonize over getting the exact amount I spend on electric, natural gas, groceries, etc each month. It varies seasonally. For groceries I try not to spend more than a "fixed" amount - based on previous years spending (which isn't working so well since inflation has hit hard and fast after nearly a 10 years of little change in my grocery spending).

I transfer the "not gonna need to spend that money until some point in the future" money to an account.

Since many of the the numbers were a monthly fixed amount (1/12th of an expected expense). It's a fixed X dollars per month (or paycheck). I used a notebook to keep track of all of this inflow of money and also the bill amounts and outflows when they happened. Eventually as my financial life got more complicated (more lumpy expenses and BIGGER lumpy expenses) I started using a spreadsheet to help me track how much I had "saved up to spend" for each line item.

A couple of years ago I opened an Ally account - because it lets me break out my total into "categories" so I can keep visual track of all the money I need to "save up to spend it". And I don't have to update a spreadsheet (and check the balance of my account(s)).

I realized what I actually have are a lot of "sinking funds" - money I need to save up to spend at some point. :)

Not sure if my Ally account is one "bucket" or lots of "buckets" I think of it as a fund of sinking funds. :)
Nice. I like Ally’s buckets system for sinking funds. It’s easy to see how far I am toward a goal and you can set up automatic deposits every month. It’s great too that you only need one savings account, instead of opening multiple high-yield savings accounts and having to keep track of them all.
"Your mind has a mind of its own. At the very moment when you are most convinced of your own rationality, you may be feeling rather than thinking your way toward a decision.” | Jason Zweig
Reamus294
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Re: how many use buckets?

Post by Reamus294 »

I use buckets:
Car
Vacation
House/planned remodels
Taxes/Insurance/other Yearly Bills
General Savings

It started many years ago when we were living paycheck to paycheck and we wanted to go on vacation and didn’t want to put it on a credit card. We could get by without them now, but it keeps me from justifying a more expensive car than I need and helps with perspective.
Mr.BB
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Re: how many use buckets?

Post by Mr.BB »

I use saving buckets. It's just mental accounting but it works for me. We have supplemental savings accounts at our credit union, and I just break it down to Car account, vacation fund, home improvement, emergency fund, tax account; aside from the normal checking and savings account.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
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AnnetteLouisan
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Re: how many use buckets?

Post by AnnetteLouisan »

I don’t utilize the concept (although I see it can have utility) because whether or not I spend on something is not usually related to whether I have the $ for it “saved up.”

I really can’t think of anything I want to buy or do that deserves a separate account earmarked for it. I decide what to buy based on what I want, need or run out of. I do an annual spending plan and follow that reasonably closely.

With respect to investments, I have retirement savings in tax advantaged vehicles, and treasuries and total market funds in taxable, with different bank accounts feeding those investments, and one account used to pay bills.
Last edited by AnnetteLouisan on Tue Nov 22, 2022 3:18 pm, edited 2 times in total.
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