Budgeting is boring, tedious work. Between tracking every penny and thinking twice before spending, it’s no wonder so many people swipe their cards and deal with the consequences later.
It’s also why the “four bucket” method is going viral on TikTok — a financial practice that’s purportedly both easy and effective for saving money. The idea? Split your income into four distinct categories and assign a purpose to each dollar, says Alex King, a financial coach and founder of personal finance website Generation Money — no expense tracking or Excel spreadsheets necessary.
Here’s what to know about this money-saving trick.
The “Four Bucket” Budget
The “four buckets” hack splits your money into two buckets for spending (essentials and lifestyle) and two for wealth accumulation (short-term savings and long-term investments). “This makes sure your basic needs are covered, you’re building wealth for your future, and that you can enjoy some guilt-free spending,” says King.
As TikTok creator @bobeema says, it’s less stressful than tracking every expense. “That is crazy-making for anyone who has more than one thing to do in a day,” she explained in her video.
“It’s a useful mental and visual framework to get you thinking about which category your spending and income falls into each month,” adds King. “This makes tracking your money more intentional, and can lead to better financial decision-making.”
It also helps you actually stick to a budget, especially if you’re new to saving or have a tendency to overspend. “If you’re someone who feels you’re not in control of your money each month, or that you feel like your money just ‘disappears’, then the four buckets method is for you,” he says.
How To Set Up Your Buckets
Let’s say you make $2,000 a month. Your essentials — like rent, groceries, and bills — might take up $1,200. If so, you can split the remaining $800 between your lifestyle, savings, and investing buckets. Think $260 in each, or however else you’d like to divvy it up based on your goals.
Want more fun money? Boost your lifestyle bucket. Need faster savings? Allocate more there. King recommends starting with fixed essentials, then flexing the other buckets as needed.
To keep yourself organized, King suggests creating a separate bank account for each bucket so your spending is clear and easy to track. If that’s not possible, you could create sub-accounts within your current bank account. “Many digital banking apps allow you to set up ‘pots’ within your account, each with a custom name,” he says.
From there, automate transfers each month so that the money goes right into its assigned bucket as soon as you get paid. “This also leans into the ‘pay yourself first’ mindset, which is a good habit to have,” he says.
The next step is to make sure each account or sub-account matches its designated purpose. “For example, your investing bucket should ideally go into an account that allows you to invest the money,” says King.
Once everything’s set up, you can mostly forget about your buckets, though King does recommend an occasional check-in to make sure each pot is still suited to your income, expenses, and lifestyle.
A final tip? Give your buckets more meaningful names. Give your buckets fun names like “Beach Fund” instead of savings or “Quiet Luxury Grandma” instead of investing. It makes your goals feel real — and keeps you saving.
Source:
Alex King, financial coach, founder of personal finance website Generation Money
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