Have you ever tried to start a budget? Gotten lost trying to categorize every single cent that goes in and out of your various accounts?
You're not alone.
Most budgeting apps try to make everything "easier" by connecting your accounts directly, automatically pulling in transactions, and categorizing everything for you. It seems great at first, but the problems show up quickly.
Many of the categories aren't correct, so you spend a lot of time correcting them. Some apps will remember the correct category and others will keep making the same mistakes.
You also spend time budgeting for expenses that you simply have to pay, like rent, a mortgage, or an electricity bill. You don't get much value from budgeting for those kinds of expenses.
You start to feel overwhelmed because you're trying to boil the ocean, also known as going from 0 to 100. Just like exercise, sleep, or any other healthy habit, starting small and building over time leads to the best results.
So let's get to the Buckets method itself.
Pick a category of expenses you have. Some common ones include kids, eating out, or "fun money" which is just money you allow yourself to spend guilt free on whatever you want. Create a bucket for this category.
Anytime you make a purchase, immediately add the transaction to the bucket. Don't worry about changing your purchasing habits in this step, just start tracking each expense. The Buckets app makes it easy to quickly keep track of a transaction, just type the amount and a quick note of what it is like "baby bottles" or "pizza delivery".
We know that many people find it annoying to add transactions manually. However, it's crucial to become aware of every single purchase you make. Remember you don't necessarily have to track every single transaction like you do with other tools. Start small, even with just 1 bucket like "eating out".
After a month or two of tracking expenses, look at how much you've spent. Use that number to help you decide what a good monthly budget would be for that bucket. Only you can decide this number based on your financial situation.
Edit the bucket to set this budget. You can also decide if you want any leftover budget to rollover from month to month. For example, if each spouse has a fun money bucket, you may want to roll it over to allow saving up for more expensive things. For a restaurant bucket, you may just want it to reset each month, whether you use it or not.
Note that changing the budget on the bucket will apply that number retroactively to all your transactions. If you want to start fresh now that you've picked your budget, you can always make a new bucket and archive your old one.
Continue adding transactions to the bucket as you have been. If you don't have enough money in your bucket to purchase something, then you have to wait until it resets. You'll quickly find that you make less implusive purchases because you want to save your budget for things that you actually want.
Congrats! You've built a new healthy habit. Some people like to have many smaller buckets, while others want a few larger buckets. You'll figure out what works for you, and feel better about every purchase you make knowing you're in control of your spending.