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The Barefoot investor book was an incredible success, selling over 1.43 million copies since 2016. Australian’s were clearly struggling and needed a simple money management system.
Wouldn’t it be nice if you had a complete understanding of your household budget? If a system to let you know how much money you could splurge and when you should tighten the purse strings?
This article will outline the pros and cons of the Barefoot Investor buckets, and alternative money management systems.
By the end, you will have decided on a system that will work for you. Whether or not you have a mortgage, single or multiple offset accounts, and steady or lumpy and irregular income.
- Why is a Money Management Strategy Necessary?
- Barefoot Investor: Saving 20%
- What Are the Barefoot Investor Buckets?
- Money Smarts
- A Simpler Money System? The Portal
- Wealth Portal Data Input
- Wealth Portal – Money Management System
- Discretionary / Essential Grey Areas Not Included
- Wealth Portal – Surplus Target
- My Wealth Portal – The Great Bits
- Simplest Money Management?
Why is a Money Management Strategy Necessary?
The success of the Barefoot Investor came down to the need for people to have a money management system. We all want to save towards long-term goals, but we also want to have fun along the way. Personal finance is getting more complex, with a dizzying array of savings accounts, credit cards, loans and investment products available.
It is very easy for you to find yourself with multiple bank accounts, savings accounts and credit cards. It’s easy to completely lose track of what you are spending on. And can lead to spending time shuffling money from one transaction account to other accounts, trying to avoid an overdrawn fee.
How can we Get Savings Just Right?
Most of us would like a Goldilocks solution to our financial plan. We don’t want to over save and miss out on experiences and adventures that we could have responsibly afforded. More often, people ignore their futures and spend almost everything on luxury purchases and experiences. Often, they are overwhelmed with the task of working out how much they need to save, so assume it’s impossible and give up.
Neither is the way to a balanced and happy life. We all need to find the balance between YOLO (You only live once) and financial independence (retire early or by traditional retirement age).
Somehow we need to work out how much to put aside in savings accounts and investments, while keeping as much money aside for special experiences. (more…)