A favorite concept on organizing where you're saving to make goals easier to see and even more importantly, easier to achieve!

• If we have just one giant, 'I want to build a ship bucket', it's hard to see where all that money's actually going to go for the various elements that we're going to need. (02:09)
• The goal for this bucket [short term] is to keep what you have more than anything else, including growth or interest. (02:56)
• The next bucket is an intermediate term bucket. And for young people, this is generally a what you would call a general or non-retirement investment account. (03:08)
• The last bucket is your longer term bucket, which often includes things such as retirement, which may be 401(k)s, IRAs, things like that 529 plans for college savings specifically. (04:07)

Quote for the episode: "The separate buckets will make sure I have a stable account, some money was there for my next car for the next year, make sure I take those important annual vacations that are really important to stop and breathe and have fun with every year." (05:03)

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Welcome to the EnjoyMore30s Family Finance

podcast. The only podcast dedicated to making life more

enjoyable for young families by hitting on the financial topics

that tend to weigh on us, stress us out, and distract our focus

from simply enjoying life.

Hello, and welcome to the 3rd episode of our new

year's series Set Your Compass for the New Year. Today, we have

one of really my favorite concepts that deals with how to

better organize where you're saving to make goals easier to

see and even more importantly, easier to achieve.

As always, if you like what you're hearing, please make sure

to subscribe or follow us on Apple podcasts or wherever you

may listen. Clicking that star, leaving the review like I always

share really helps us reach literally the millions of other

young families out there just like you. So far this season,

we've covered setting your compass with your spouse, so

joint goal setting and then last week, we discussed the

importance of actually paying yourself first, giving some of

that money that you know you work really hard for every

single day to yourself to reach those goals that would actually

make you happy. So if you haven't checked out those

episodes yet, definitely do that soon.

Today's episode is titled Use Lots of Buckets exclamation

point, where we are going to cover how separating out where

you are saving for your goals can actually add a lot of

clarity to the situation and help you better organize and

achieve them. So if you walk away from this episode, saying,

I now know better how I should organize my house, vacation,

wedding, college, or any other goals that you may have by

account, then you would have achieved the goal for this

episode. If you think to how you organize your clothes, you

probably have some kind of a system. I'm guessing you just

don't have all of your dress pants and shirts and sweatshirts

all just you know, thrown into random drawers around your room.

You probably group things like a normal human being together with

other like things in spots, it makes sense to find them and

know what you actually have. The same thing goes when it comes to

us saving to best build this ship that we want to take us to

our goals. If we have just one giant, 'I want to build a ship

bucket', it's hard to see where all that money's actually going

to go for the various elements that we're going to need. Some

of it we may need right away some of it we may not need until

the ship is built. Some of it is to refuel maybe when we actually

get there. So by breaking this up into different buckets, we

can better see what we have for each specific purpose that we

need.

To start us off, there are three general types of buckets: a

short term bucket, an intermediate term bucket, and a

long term bucket. A short term bucket is for things that you're

going to need over the next 1 to 3 years, say somewhere in that

range. This type of bucket uses bank accounts, because that time

period is really too short for even a more conservative leaning

investment in my opinion. The goal for this bucket is to keep

what you have more than anything else, including growth or

interest. So growth and interest are not the primary driver for

money in this bucket. It's to keep what you already have.

The next bucket is an intermediate term bucket. And

for young people, this is generally a what you would call

a general or non-retirement investment account. So it's a

flexible account. It's something we've referred to before as a

buffer account. So this bucket is for anything from say 4 to 10

years really even longer out as we're you know younger families.

So enough time where an actual investment would likely be

appropriate, as there should be time to recover from any

temporary downs that may occur. Now, if it's say, to buy a new

home, and maybe 5 years down the road, maybe this account is

moderate or even moderately conservative, where if it's for

a second home 10 years from now, the account really can be very

much on the aggressive side from a time horizon standpoint.

Overall, though, like I said, this is a very flexible account

that covers a lot of potential goals. And so this can be great,

especially for younger families, where there are a lot of years

that we aren't quite sure of, you know, where we may end up or

how our goals are gonna change.

The last bucket is your longer term bucket, which often

includes things such as retirement, which may be

401(k)s, IRAs, things like that 529 plans for college savings

specifically. So things along those lines. These for younger

families tend to be very, very long term, so they certainly can

be more aggressive leaning from a time horizon standpoint.

So now that we have these three general types of buckets, what

we want to do is fit our goals within them. So let's say I have

goals of buying a car next year, let's say, annual vacations, a

second home maybe 10 years down the road, along with the normal

you know retirement and college goals for my kids, things of

that nature. The car and annual vacations are short term. So for

those I would set up separate bank accounts specifically for

those goals. For the second home that would fall into that

intermediate term general investment account. And since it

is 10 years out, it would be more aggressive for me. For

retirement, I might use my 401(k), taking advantage of the

company match. For college, perhaps I would use separate 529

plans. But you know, you may see where I'm going with this,

separate buckets, separate accounts for each one of my

major goals. So I can actually see what track I was on for each

of them. If I just have one account for all those things,

you know, one drawer for all my clothes, how would I have any

idea if I was going in the right direction? How would I have any

idea if I had enough or too much or somewhere in between? The

separate buckets will make sure I have a stable account, some

money was there for my next car for the next year, make sure I

take those important annual vacations that are really

important to stop and breathe and have fun with every year.

Hence, use lots of buckets.

Overall, thanks for tuning in today and join us for next

week's episode, which is almost part two of today's

conversation. I thought about putting it together with today

but decided to separate it out. So next week's episode is called

Money Blocking for Fun, where we're going to break down just

how you can use some of these same separation techniques, not

just for the larger goals by using separate accounts, but

also for smaller everyday type occurrences to increase your

happiness on a daily lifestyle basis as well.

Overall, if you're able to implement what we cover today,

that's fantastic, less to worry about than before and you could

focus more on just enjoying life. If you're wanting help

with these things or you have questions that you need help

clarifying, check out that Ask Joe section on my website

www.enjoymore30s.com. That's enjoymore30s.com. Until next

week. Thanks for joining me today and I look forward to

connecting with you again soon.

The conversations on this show are

Joe's opinions and provided for general information purposes

only. They do not constitute accounting, legal, tax, or other

professional advice for your specific situation. You should

always seek appropriate advice from a financial advisor,

accountant, lawyer, or other professional before acting upon

any content or information found here first. Joe is affiliated

with New Horizons Wealth Management LLC, a branch office

of TFS Securities, Inc., and TFS Advisory Services an SEC

Registered Investment Advisor, Member FINRA/SIPC.