Your Money & Business

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Filling Your Buckets: A Guide to Budgeting and Financial Stability
April 2024

By Dr. Jenipher D. Cornelius

Earlier this year, I heard a story about buckets — that we constantly take from or fill other people’s buckets. This got me thinking about the “buckets” that pertain to our finances. These buckets are continually being filled up and depleted. Since it’s that time of year (tax month), finances are front and center in the minds of everyone filling out those dreaded forms. However, your financial health should be something you think about on a regular basis. Take a moment to review the budgeting tips shared here and, optimally, work them into your daily mindset/routine. Avoid the list of common pitfalls to look out for as well.
 
With nearly 20 years of experience in finance, from retail banking to investment advisory, I have seen it all and learned invaluable tips about budgeting and saving. I also sought additional advice from my good friend, Laura Dix, CEO of Legacy Financial, an investment firm in Woodburn, Oregon. She offers guidelines she shares with her clients about budgeting and saving. Funny enough, we were on the same page about buckets!
 
Budgeting is the cornerstone of financial stability and success. Yet, many people find themselves overwhelmed or don’t know where to begin. To start filling those buckets, follow these tips from Laura:
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1. Know where you HAVE to start: This can be painful, but sit down and account for what you need, where you are currently spending, and where there is room for improvement.
2. Start today: Budgeting does not have to be restrictive. Identify where you are and where you want to be. Then set up a consistent routine and plan.
3. Pay yourself first. This budgeting method includes emergency savings, windfall savings (think Christmas gifts, travel, even new tires or painting your house), retirement, and anything else to help your long-term and short-term goals. 

Once you pay yourself first, hitting those savings buckets, you must pay your bills next. What’s left of your paycheck can then be spent on your wants because you have done everything you need to. The “Pay Yourself First” plan falls right in line with my “buckets” idea, and Laura helped name those buckets:

1. Needs
2. Retirement Savings
3. Debt-Down Strategy: Create a paydown strategy; don’t just pay a little extra.
4. Passions: This can be whatever you love: shoes, travel, wine, activities with your family, hobbies you love. This is the bucket that makes you tick and will keep you motivated to fill these buckets. In your budgeting plan, make sure you add to this bucket monthly, so the overall process doesn’t feel too restrictive.  

 
Now that you have a plan and are thinking about your buckets and how to fill them up, let me share a few common pitfalls to avoid.

1. Underestimating Your Expenses: Be realistic when estimating your expenses. It’s imperative to also do some research on irregular or unexpected costs like new tires, car repairs, or home maintenance.
2. Ignoring Debt: As Laura mentioned, establish a debt pay-down strategy and stick to it. Know how much interest you pay monthly on each bill and prioritize this list to reduce your debt burden steadily.
3. Inflating Lifestyle with Income Increase: As your income increases, it’s tempting to increase your lifestyle proportionately. Instead, allocate these funds towards your savings or debt paydown.
4. Slacking Off on Tracking: You must monitor and track your monthly spending and compare it to your budget. There are several apps; even a good old spreadsheet can do the trick. But confirm you are staying within your budget regularly to avoid getting too off track.
5. Forgetting to Adjust Your Budget: In addition to tracking, you need to regularly adjust and adapt to accommodate changes in income, expenses, and financial goals.

"Set aside time each month to review your budget and assess your progress. Do you need to skip your daily Starbucks run this month to get back on track? You will only know if you consistently review."  ~J.D.C.

​Remember, life happens, and sometimes you find yourself going sideways. Don’t quit! Take a breath and get back to it. Lastly, I want to share a few tips for staying on top of your budget.

1. Don’t Go at it Alone: There are people like Laura who can help you get your goals on paper and make a plan for saving and reducing debt. You can literally start anywhere, anytime, as long as you start.
2. Schedule Regular Reviews: Set aside time each month to review your budget and assess your progress. Do you need to skip your daily Starbucks run this month to get back on track? You will only know if you consistently review.
3. Build Your Emergency Fund: Build that emergency fund to cover unexpected expenses or income disruptions. Aim to save at least three to six months’ worth of living expenses in a separate account for added financial security.
4. Celebrate Milestones: Whether you have hit a savings goal or paid off a credit card, acknowledge this achievement! These types of wins help us stay motivated and keep the momentum.

 
Budgeting doesn’t have to be a daunting task. It’s important to remember that it’s a powerful tool to help you control your finances and work towards a secure financial future. By understanding the basics of budgeting, avoiding common pitfalls, and staying disciplined, you can achieve your financial goals and enjoy peace of mind knowing you and your finances are on track.

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Dr. Jenipher D. Cornelius is a change management and leadership development consultant. She brings years of expertise to help businesses adapt and thrive, while also shaping future leaders as an adjunct professor in higher education. With a doctorate in strategic leadership, her insights are grounded in both academia and real-world experience. She is a contributor for Sanctuary in the areas of business leadership, career development, and finance.