Today I'm going to be talking about the barefoot investor bank accounts and bucket, so we're
going to be looking at how the barefoot investor recommends that you set up your bank accounts,
which I think is a great way to help you manage your budget and manage your finances. It can
get a bit confusing. He uses some confusing names, so we're going to look specifically
at how he recommends that you set it up, and then I'm going to talk about how I've gone
about setting it up, which is a little bit different to the barefoot investor. So we're
looking specifically at this chapter on barefoot banking and I know I got confused and a lot
of other people would get confused as well. So we're going to go through each of the accounts
in this episode today so you can really understand it. And then if you want to go ahead and set
this up for yourself, it's actually really easy to do.
So first we're going to look at this idea of buckets. So he talks about the three different
buckets in your life. So you might be able to see that on there. All right, so first
we're going to talk about the buckets, then we're going to talk more specifically about
the bank accounts. So the barefoot investor talks about these three different financial
buckets in your life. You've got the blow bucket where this is where you spend your
money on your life, you've got rent, you've got living expenses, you've got all of that
sort of stuff. Mojo is a fancy word for your emergency savings. So instead of having a
credit card, you have Mojo and then grow is your investments and building your longterm
wealth. So the one that gets most confusing is blow. So we're going to spend the most
time on that, but we will look at Mojo and grow as well.
So with blow it's recommended that you set up for bank accounts with ing. The reason
that he recommends ing is because they have zero fees, which is massive. I've been challenged
so many fees by other banks. You can also use any atm as well. And so just overall it's
a pretty good experience with ing. I personally have followed this advice and set it up with
ing and I will leave an affiliate link in the description down below. If you want to
go ahead and sit up through ing, then I think you do get a $25 credit at the moment and
then I also get $25 as well if you sign up through that, so no pressure to do that. Obviously
you can go to [inaudible] dot com dot EU, setup yourself, but that's there if you want
to try it. The barefoot investor recommends that you set up for accounts.
You've got two accounts that actually have cards attached to them. I tried to set up
three because I wanted three, but ing kind of had a max of two. I'm sure I could call
them and set up three, but I haven't been bothered doing that. So basically you have
two accounts that have cards attached to them. You've got your daily expenses which accounts
for 60 percent of your income and this is where you're spending your money on your coffee's,
on your groceries, on all of this sort of stuff. So the barefoot investor recommends
you try and live off 60 percent of your income through the daily expenses account. You then
have your splurge account, which is 10 percent of your income, and this has to spend on whatever
you want. Basically the splurges in your life. Maybe it's that extra coffee, maybe it's some
new shoes for the wife like I purchased today.
That's your splurge account that you can spend on whatever you want. You then have to online
saving accounts with ing. You've got your smile, which is 10 percent of your income.
This is to save towards bigger purchases that will make you happy. Holidays, TVS, cars,
whatever it may be that your smile account. And then fire extinguisher is a weird one.
It's a weird name, but it's also a weird account because you put money into the fire extinguisher
and he recommends 20 percent, but money doesn't stay in that account. So fire extinguisher
is to put out the financial fires in your life, and this isn't necessarily immediate
financial fires that you have now, but just fires that are burning and just taking money
out of your life. So this is things like credit card debt, I'm maybe a mortgage debt and things
like that, so money would go from daily expenses into your fire extinguisher, but then it basically
leaves the fire extinguisher straightaway and goes where it needs to go.
So that might be to pay off credit card debt, pay off mortgage debt, or if you paid off
debt, then we'll move over to Mojo or grow as we'll talk about in a minute. Now practically,
how does this work? Basically all your income goes into the daily expenses account. This
is what I think he recommends. So all your income comes into the daily expenses. This
is where you manage everything. Your bills also come out of here, so your car insurance,
your car read, Joe, your rent, your electricity, everything kind of comes out of daily expenses
as well as your weekly or monthly living money. Then you've got your separate splurge account,
which is just for splurges, and then you've got your online savings accounts. Now for
me, this got quite confusing because the way that I do my budget is that I pay all my regular
expenses, phone, Internet, ran electricity, that sort of stuff first, and then me and
my wife have a weekly budget that we try and stick to.
So having everything go in and come out of daily expenses, especially when. Because I
run my own business, we're kind of get a regular payments. So sometimes as weekly payments,
sometimes fortnightly, sometimes there's monthly checks, so just kind of got super confusing
having this daily expense account, everything going in and out. We're not sure how much
money we have left for the week because a new income came in so just got really confusing.
So we kind of altered this. And what we did was instead of having our second card be splurge,
we actually move splurge down and made it an online savings account. And I'll show you
through all this in a sec. And then what we did here was we set up a separate daily expenses
account and then we had what we're calling the pot. So we have the pot. So this is where
I kind of manage everything, so all the income comes into the pot, our regular bills go out
of the pot and then we have our savings accounts that come off that we then also transfer the
amount of money that we need each week into our daily expenses account.
And so this is the one where we use the card, this is where we spend our money. So we transfer
money every week into that and then when the money has run out of that account, we know
that we've reached our budget for that week and we can then pull from splurge or pull
from fire extinguisher if we've gone over for the week. So that's Kinda my alteration
of the blow buckets. So going into my online banking, this is my ing account right here.
Basically you can see those two accounts. So these two accounts have cards attached
to them. We've got the pot where everything goes in, regular bills come out. And then
we've got our everyday spending which is its own little island. So we send money into that
and then each week we spend off that. And then we know when we've reached our budget
because there's no money left in the account.
So these are the two cards, so the part we just use the card for an rma and car insurance
and things like that as well as paying bills. And then everyday spending, you know, we spend
our everyday money on. I then set up a few different savings accounts as well. So we've
got the splurge account here. So I put money into the splurge account each week. I don't
do the full 10 percent, 10 percent, 20 percent I do what I can afford. So I've got my budget
that I think we can live off. And then I've got certain amounts of money leftover that
I can put into splurge that I can put into the smile account, which I'm calling holidays
and happiness because my wife got too confused with the small name. And then we've got the
fire hydrant here. So this is the one where money goes in and then it moves to where it
needs to move.
I've also set up another savings account called big bills. So you're talking electricity,
read Internet phone. All of this sort of stuff, I put money in the big bills account each
week and so basically there's always money in there, so whenever a bill comes in, I've
got money to pay it and I just take it out a big bills, move it back into the pot and
then I pay that bill when I have to do it, so each week I'm moving money into big bills
to make sure that I can afford all the bills in my life. I've then got their savings account,
which is my Mojo. Now he recommends that you have Mojo with a different bank, but I just
haven't been bothered to do that yet, but it will go ahead and do that soon. We've talked
about blow and we've talked about how to set up those bank accounts.
Now let's go ahead and have a look at Mojo. Now, Mojo is recommended to have a separate
bank account. The barefoot investor recommends you bank. Again, zero fees. They have a decent
interest rate, but it's also separated from your regular banking, so you're not going
to pull from it whenever you want to buy that next pair of shoes or clothes or whatever
it may be. Now he recommends that you set up this savings account with ubank and you
do whatever you can within your power in order to get $2,000 into that Mojo account. Now,
another great book that I'm reading at the moment is the $1,000 projects by Canna Campbell.
So I recommend you go ahead and check out that book if you haven't already, and that
talks about saving up these separate psalms of a thousand dollars outside of your regular
income. So basically that'll help you get to $2,000 in your Mojo account, but basically
sell whatever you need to sell, do whatever extra work you need to do, get $2,000 into
that Mojo account.
The idea here is that you don't have a credit card, okay? Your Mojo account is your credit
card, so if you have Mojo, if you have money saved up, you don't need a credit card because
you've got your own money saved up that you can use when you need to use it. So the idea
here is you don't have a credit card because there's fees attached to it. It was basically
not really worth it. And so if we go back to our blow accounts, right? Our fire extinguisher
one here that we're looking at before this, originally we used to pay down debt. Okay,
so we start to pay off our credit card and things like that, but once our debt is paid
off the money that's going into the fire extinguisher, then let's just add an Arrow here. Then goes
into your mojo account and builds up this Mojo from the initial starting point of $2,000
to three to six months worth of income.
So this is you're building up your savings, three to six months worth of income. If you
lose your job, if you get hurt or something and can't work, then you've got this three
to six months to live off to get you by, so that's the idea there. You, once you've paid
off your debt using the fire extinguisher, you then build up your Mojo. Then once your
Mojo is paid off, then you go ahead and that money goes now into the grow account, so the
grow is where you're going to be investing, where you're going to be growing your wealth,
and so money goes from the pot into your fire extinguisher and then goes out to Mojo until
it builds that up and then goes to grow. Now grow. You can choose to invest in whatever
you want to invest in. You might just have savings.
You might put it into shares, you might put it into property, you might put it into cryptocurrency.
You can put it into whatever you want to put it into. That is up to you. It's up to you
how you grow and how you build your wealth, but that's the idea is that basically you're
saving money. It's going into your account, but first you pay off debt, then you build
up your Mojo, then you invest into growth. Okay, so there you have your barefoot investor
set up, you've got your blow Mojo and grow three buckets in your blow account. You've
got your daily expenses, which is 60 percent of your income. You've got splurge, which
is 10 percent of your income. That's two different cards and then you've got the online savers,
smile and fire extinguisher, and then money goes into the fire extinguisher, pays off
debt or financial fires in your life.
Then builds up Mojo. Then builds up grow, so that's the basis of it. Mojo is your savings
account and starts with $2,000, but you try and build it up to three to six months worth
of income and then grow is where you grow your investments, you grow your longterm wealth
so you can do it as he recommends or there's my alteration as well. I don't know that's
going to be better for some people and that's where you have the pot bank account where
income and your regular bills go out of you. Then have your daily expenses, cod where your
discretionary money goes and you can spend that, and then you've got online savings accounts
for small splurge and fire extinguisher as well. I have that big bills saving account
to that I talked about, and then again a fire extinguisher goes to pay off debt.
Then build Mojo. Then it goes into grow. Setting up those bank accounts with ing is really
easy. You can go and do it yourself. Ing did send me this email saying refer a friend and
you both get $25. So that's why I'm giving you a heads this affiliate link because they
sent me this email saying $25 a pop. You can say that if I refer a friend start 16th of
March, that you know we can each get $25. If you sign up for this, I don't care if you
do or not in terms there obviously that you've got to put a thousand dollars into your new
account before the 31st of May. So if you're listening to this after the date, you might
not have this offer anymore. But as you can say, the office here, I'll leave the links
in the description down below, or you can go to on-property dot com dot adu, forward
slash ing, and it will redirect you to this special offer, even the special offers finished.
Then I'll just redirect you to ing dot Com dot EU, and you can sign up and there'll be
no deal, but you can still go ahead and sign up. It's free. The bank accounts work great.
I'm enjoying it at the moment. My wife doesn't like that. The card is orange. She doesn't
think it's very sexy, so that's the biggest downfall with ing. Otherwise, everything's
been great so far. I hope that I explained it well. I hope now that you understand the
buckets, you understand the bank accounts and feel empowered to go ahead and sign up.
It's an online bank, so setting it up was really simple. You basically just go through,
click open, now say you're a new customer, and then just fill out details about yourself
and then your partner. If you have one, you set up your first bank account and then once
that's set up and you can log in, then it's really easy to add that second account and
to add those online savers.
I did it all in a couple of hours. The cards came in about a week and then I was able to
really set up this process and start using it, been doing it for a couple of weeks now.
It's really helped our budgeting, just the fact having that separate account that we
put our discretionary money in each week and we know when we've gone over budget because
the account becomes empty and then I've got to move extra money over onto it if we want
to spend more money. So it just really helps you be mindful of your budget and helps you
be aware. Again, go to on-property dot com dot a u I n j. If you want to sign up using
that offer. Thanks. If you do that. Otherwise, go to ing dot Com dot a u and don't forget
to check out the barefoot investor book if you haven't already, so go to on property.com.edu
forward slash barefoot or redirect where you can buy that book. If you haven't purchased
that book already, definitely worth a read. I found it very, very helpful and insightful.
So go ahead and check it out and until next time, stay positive.