The three-bucket system

Scott Pape built a system turning a budget into three buckets. I borrowed it whole, the week I stopped pretending my debt would sort itself out and I have run it since.

Here's the shape of the buckets. Blow carries the everyday weight and fights debt. Mojo is the safety buffer, out of reach on purpose. Grow is where long-term wealth builds, separate from the rest. That's the whole system and here's my own version of it.

Bucket one is Blow, and mine runs through four bank accounts. Daily Expenses holds sixty per cent of my salary and covers the bills. Splurge and Smile take ten per cent each, one guilt-free spending (a special birthday gift for friends or family), one for anything with a date on it (an annual holiday) respectively. Fire Extinguisher takes the rest, twenty per cent and rising, closing out non-productive debt: credit cards, personal loans, car loans, student loans. It does the job my payment plans did years ago, except the account collects on its own. I did the sums and automated fortnightly payments. Set and forget.

Bucket two is Mojo. My emergency fund sits at a bank I use for nothing else, with no card. Spending from it takes an extra step rather than a reflex. That friction is the whole point. Money that's easy to raid stops being an emergency fund and starts being spending money.

Pape built Mojo for exactly that: debt avoidance rather than saving. It's banked separately with no card, so reaching it takes a deliberate act rather than a tap. His target is three months of living expenses. I set mine up the same way: takings from a garage sale to start, then whatever i could add over time. A withdrawal just means topping it up again.

Bucket three is Grow. Until recently, it hadn't concerned me as much as the other buckets. It's built for wealth built over years rather than fortnights such as super, shares and property. Mine includes superannuation, contributed the way I wrote about on Day 2, plus a property I followed Pape’s steps to secure.

Here's where the buckets meet Port Moresby and need buckling to fit. Three buckets become several bank accounts once money needs somewhere to sit.

Kina Bank charges K10 a month on its Statement Savings account when the average balance sits under K5,000, and K10 again when it drops below K500. Its Kina Tomorrow Savings account carries neither charge. I kept money together until I could safely clear the minimums.

Pape's instruction to bank Mojo somewhere else assumes real choice between banks. PNG has seven commercial banks now, three newly licensed in 2024, and BSP remains the largest by lending and customers.

Mojo's buffer is built for surprise costs and here that list runs wider than a car repair or a medical bill. Our social obligations belong here too: a haus krai contribution, a bride price commitment, a wantok's request.

I've had one obligation land the same week as a bill, and Mojo absorbed it before I'd noticed the clash.

The system also assumes a paycheque on the same date each fortnight and income here often runs on its own schedule.

Best

Amanda

P.S. What’s your view on today’s newsletter? Did I miss something out that you’d like to share? Write to me, [email protected]. I may not get back to you, but I will try to read what you send in.

Wild Money is general information only, drawn from my own experience and research. It isn't financial advice, and nothing in it is a recommendation to buy, sell, hold or manage money in any particular way. What worked for me won't necessarily suit you. Please seek advice from a licensed financial adviser before making decisions about your own money.