Barefoot Investor Bank Accounts and Buckets Explained

Barefoot Investor Bank Accounts and Buckets Explained

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 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.


  • Jordan Roberts

    May 10, 2018

    What software application where you using to graph the different accounts?

  • Ekhlas Nasser

    May 11, 2018

    Big fan of your channel , just wondering if using Fire extinguisher as the mortgage account vs offset account where all your money pooled in to facilitate paying mortgage faster , wouldn't defeat that purpose ?

  • Alex Campili

    May 13, 2018

    We have a similar setup to you except we do use a cc, (free with the package we're on) all of our accounts are offsetting the mortgage, and by using the credit card (properly) we save quite a bit on mortgage interest as the money is kept in our accounts longer.

  • Jack Russell

    May 16, 2018

    Hi mate, I’ do something a bit similar to yourselves and Scott,
    However I do my setup through Suncorp.’
    I operate 4 accounts only.
    Everyday Options with 2 linked sub-accounts ,and a Suncorp Growth Saver for long term saving (Mojo if you like)
    I use different nicknames for them to Scott,
    EverydayExpenses 50% income
    Unexpected Expenses 10%
    Rainy Day Savings 20%
    Long Term Goals 20%.
    I’ve been using this for around 6 weeks and have already been able to pay off and cancel my credit card (which I don’t miss).
    I’m now using my Unexpected Expenses account to pay off a personal loan I have and should have it wrapped up in about 6 months.
    I’m shortly going to use my Rainy Day account to transfer money into my superannuation.
    I’m glad your system is working for you, thanks for the interesting video.
    PS, if your wife doesn’t like the orange card, tell her Suncorp ‘s are green lol.

  • saundy24

    May 22, 2018

    Great example!! Thank you

  • Eden Connell

    June 4, 2018

    Helped heaps I run my own business so "The Pot" can be the account for all my paid invoices. Cheers

  • Gary Whitney

    July 6, 2018

    2018 update is out if you have bought through audible then you can delete it on your device and re-download no extra cost. If you haven't used audible before you can get the book for free as your first book you can cancel your subscription and still listen and download the book and listen no problem. So there is no barrier to entry for this book all you need is an email address. Share this link with anyone

  • Ryan Jackson

    July 19, 2018

    I bought the book from ur link

  • Jacque Webb

    August 1, 2018

    Thank you so much,….. you did make it so much clearer. the fire extinguisher, mojo and grow buckts did confuse me.

  • kristine kate mercader

    August 7, 2018

    Try Credit Union Australia, no fees as well

  • Miss Nikki Lou

    August 8, 2018

    Thank you! Great explanation,got so confused with all the bank accounts.

  • Luke Hetherington

    August 11, 2018

    Thanks for that awesome video. Question – where does saving for a home loan come into it? Do you do that (get your 20% deposit) before building up your Mojo (3-6months of income)? Cheers.

  • Tina English

    August 13, 2018


  • Holtzmann 82

    August 17, 2018

    Just invest in Afterpay (asx-apt)
    Absolutely mental growth rate.

    Look @ the comparison to Amazon:

  • Reivilo

    August 28, 2018

    Hi mate, thank you for this video i like the way you have set up your accounts. Just starting the book and also opening up my accounts.Just regaring the saving accounts it is good maybe to explain that only one of the saving maximiser will be full rate at 2.8% (because of the depoit of $1000 every month + 5 debits per month mini ) the other will be at 1%…am i right ? How is it working for you ?

  • jt jt

    August 31, 2018

    Hi, thanks for the great video.

    I went with Scott's setup. I understood it this way:
    Daily Expenses (60%): this account is for the absolute minimum to keep you going
    – min mortgage/rent
    – utilities
    – fuel/parking or public transport
    – insurance
    – groceries
    – internet, netflix, spotify
    Splurge (10%): this is for discretionary daily items. Using this separate account with it's own MARKED card limits your paywave splurging to 10%.
    – shopping
    – wine/alcohol
    – take away lunches and dinner
    – lattes
    – restaurants
    – movies
    – pub
    Smile (10%): savings for longer term goals 🙂
    – holidays
    – sound system
    – furniture
    – new computer
    Fire Extinguisher (20%): put out financial fires. Totally depends on your circumstance
    – use it to get rid of credit cards for good
    – unexpected car service bill or tyres
    – dentist bills
    – save up for home loan deposit
    – build up 3 months of wages in your "Mojo" account. This gives you financial security if you lose or want to quit your job.
    – extra repayments to pay off home loan early


  • MRC

    September 3, 2018

    Thanks for that mate! Haven't bought the book yet but started to research a little bit. Just to clarify as your graph is slightly confusing:

    The Pot: 60% of income
    Splurge: 10% of income
    Smile: 10% of income or 10% of pot?
    Fire Extinguisher: 20% of income or 20% of Pot?

    I'm assuming all those percentages are based off the income, just double checking 🙂

    Cheers and thanks!

  • 94jaydogg

    September 3, 2018

    good video mate, I already had an okay saving system but after watching this I've learnt a few more tricks to improving it more. Thanks

  • Jacob Lekki

    September 5, 2018

    Great explanation, thank you for your time.

  • RileysFilms

    September 14, 2018

    I decided on Me bank for the 4 main accounts after weighing the pros and cons.

    ING only gives you the bonus interest in one savings account. The other one only gets 1% interest. There's also a minimum deposit of $1000p/m, and you have to do 5 transactions a week.

    With Me bank the bonus interest covers all savings accounts, no fees either. The only requirement for bonus interest is to use tap and go to make a payment every week.

    Ubank was almost better, but it has ATM fees.

    I used RAMS for mojo. 3% interest per month, requirements are to deposit $200 per month without withdrawing.

  • cmcmanaway

    September 26, 2018

    I’m listening to the book now he’s making a lot too complicated all you need to do is with them to savings 10% be sent to investing in 10% to Charity 10% so you need basic quick and simple and then with the rest for that’s what use for every day living

  • leighjackson19

    October 10, 2018

    Hi Great video. How do you spend your splurge without a card or atm access?

  • Bonza Books

    October 13, 2018

    Where did you get that round surf print that’s on your wall? I want to buy it with my Splurge money!

  • SummerHaze83

    October 16, 2018

    This is an amazing book. It truly is the only money guide you need. Simple and Concise . Buy this book from Amazon

  • Brian Varghese

    October 23, 2018

    Fantastic explanation mate. Kept re-reading the chapter but it wasn't clicking with me. You summed it up great!

  • G Hover

    October 30, 2018

    Hi, If you have a mortgage do you just pay minimum and build up in a savings account and do lump sums every say 6 months

  • Manoj's Random Observations

    December 1, 2018

    Thanks for the video explanation! Very helpful. If a couple, do you set up the Splurge account also as a joint account? I think in the book, Scott refers to Daily Expenses as being a joint account but perhaps I am wrong and he meant both. Could you clarify for me please? Thanks again 🙂

  • J

    December 1, 2018

    Actually, Heapsss of banks dont have fees anymore. Alot of barefoot advice is slightly misguided. He also over complicates the structures unnecessarily

  • Sakura Moon

    December 26, 2018

    Thanks for explaining this. I’ve read both books, but was confused about scot’s bank accounts. It’s more confusing when you listen to it on audible

  • clown192

    January 13, 2019

    I think the biggest thing to take from it all is you start to play around with the buckets or whatever and learn about your money while doing it, rather than just waiting for a bill to come in and crying because you don't have any money.

  • Cee J M

    January 17, 2019

    Thank you so much!
    I've been reading Barefoot for the past week and the bank accounts really confused me
    The way you organise your weekly spending based on how much you have left after bills is exactly how I work out my spendings/savings etc, your explanation was so easy to understand!

  • Heather Te Amo

    February 14, 2019

    What do you do if you lots of debts do you still have a grow account or do you pay off debt.

  • Undeniable Paradox

    February 16, 2019

    I feel like the barefoot investor just boils down to save and invest instead of using credit cards. I don’t understand the hype because this just seems like common sense.

  • CuppaTCat

    February 21, 2019

    Hey Ryan, does my partner and I both set up these two accounts individually? Thus keeping our accounts seperate? Or as joint? I wasn’t too sure on that when I read the book. Cheers mate, loved the vid

  • Shaun Costigan

    March 2, 2019

    Can anyone name that flowchart software?

  • heyemile23

    March 9, 2019

    If you transfer into your daily expenses account from 'the pot' instead of having your wage put in, will you incur atm fees etc.. ? because you haven't transferred from an 'external' account?

  • Melanie Ishmael

    April 3, 2019

    Thanks for a great video. Your personal set up makes sense to me. This is just what I need.

  • Amy Stewart

    April 11, 2019

    thank you! very well explained

  • dusk1234567890

    April 20, 2019

    You have to be earning a lot to have that many accounts…

  • AussieMoneyMan

    April 20, 2019

    Great video, shame there is not more like this on YouTube! Thus I made my channel. Keep up the good work man

  • Amanda McKenna Lupa Howl

    April 30, 2019

    This how I do it because I am paid monthly and my partner is paid weekly

  • Annalise Kelly

    May 22, 2019

    Hi, thanks for your video! I've been getting confused around the MOJO account. I'd love some clarification from anyone! 😀

    1. start with $2000
    2. put 20% in (after fire extinguisher has dominoed debts)
    3. save 3 months of (and here's the question) is it just living expenses ie rent, petrol, electricity, insurance groceries, netflix, spotify OR entire blow bucket which includes all that's a part of daily expenses + 10% splurge + 10% smile OR as you've said 3-6 months of your income ??

    Scott has used "blow bucket" and "living expenses" interchangeably however my understanding was that blow bucket was the combination of splurge, smile and living expenses.

    Below quotes from book:
    "You’re going to boost your Mojo Bucket to three months of living expenses in case of an emergency (and an emergency isn’t a trip to Bali because Jetstar is having a sale).

    Okay, but how much is that?

    Simple. It’s whatever you’re putting into your Blow Bucket each month—times three."

    "Yes, our entire money management plan consists of dividing our income into three ‘buckets’:

    a Blow Bucket, for daily expenses, the occasional splurge and some extra cash to fight financial fires

    a Mojo Bucket, to provide some ‘safety money’, and

    a Grow Bucket, to build long-term wealth and total security."

  • Emily Glynn

    May 29, 2019

    this was so helpful i was so confused reading the book

  • Kath Hawkins

    June 17, 2019

    Mainly good stuff. But reckon you might be missing out on the power of compound interest in your pot by having too many separate savings maximizer account? Just sayin'…

  • Sohan Gokarn

    June 29, 2019

    I think you've got the equation slightly mixed up – meaning out of the 100% total income, 60% goes towards daily living expenses, 10% goes towards the Splurge account, 10% goes towards the "Smile" account and 20% goes towards "Fire Extinguisher" account. I reckon you might have meant the same, however the video explanation says that the Smile and Fire Extinguisher %'s come out of the 60% living expenses account, which I'm referring to as inaccurate. Thanks for your video though, because your authentic and genuine nature is as good as Scott's. 🙂

  • Lauren

    July 31, 2019

    So all the accounts are joint except the pot? Is that correct? The barefoot investor is very against separate accounts for married couples. I'm not married, but in a defacto relationship with a child so I figure it is the same except I really dislike the idea of joint accounts because I don't trust anyone with my money. Any ideas? What do you do?

  • Helen Lingard

    August 7, 2019

    what if you're not in Oz and no ING?

  • Caryl SK

    September 10, 2019

    I have a question- Fire Extinguisher is the account to pay down debts however you cannot set up direct debits or Bpays from this account. So to pay anything you need to transfer it back to the everyday which seems a waste of time. Am I missing something?

  • Rob Birchall

    September 11, 2019

    Question – why do you have "Bills" Account as a savings account as you cant pay bills from this account? I'm confused

  • DaddyJaff

    September 26, 2019

    Nice vid. Would paying debt be a higher priority over saving? Then save once debt free

  • pete beat

    October 4, 2019

    Awesome vid mate!! Cleared up a couple things, waiting on my audio book to come in the mail! Have a good weekend

  • Evin Scanlon

    October 23, 2019

    Does he recommend that you close down your current account with the financial instruction? For example should I close down my commonwealth account or use if for MOJO?!


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