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You’ve probably heard banks talk about “buckets” before – maybe even a finance author or a ‘finfluencer’ has mentioned it. It’s a popular term in personal banking at the moment, but it’s nothing new.

'Bucket budgeting' is simply a transparent and realistic approach to managing your money – think the modern-day version of putting your cash into envelopes marked “bills”, “savings” and “everyday”. Although in saying that, the envelope way of managing money is having a resurgence, thanks to some Instagram and TikTok influencers.

Sticking to a budget, for many of us, can be a bit like following a diet. We reach a point where we know we need to rein in our eating - or in this case, our spending - to get the result we want, however, the more we place restrictions on ourselves, the more challenging it can be to sustain. Anyone who has successfully managed to reach and maintain a healthy weight has probably discovered that a long-term approach is the key.

And the same applies to your household budget.

Budgeting, simplified

When you make the decision to get your finances under control, the first step is to be realistic about what you can stick to. Review and think about your bills, everyday expenses and goals for the future. This is where the buckets concept comes in handy.

With the help of online banking and mobile apps, it has never been easier to get a clear view of your money situation. Setting aside funds for different purposes is easy - you can simply use multiple transaction accounts and a high-interest savings account to manage your saving and spending. Think of these as your ‘buckets’.

The benefits of bucket budgeting include:

  • Motivation – watching your savings grow towards a particular goal can be a great motivator to help you avoid overspending in the short term and to keep you on track.
  • Visibility – understanding exactly how much you are spending in different areas can be helpful to make any changes necessary – for example identifying a need to cut back on eating out.
  • Security – ensuring there is always enough money set aside for the essentials and this money isn’t being spent on other discretionary items.

Here’s how to budget in buckets

1. Categorise your spending

To get started, make a list of all your expenses and allocate categories to them to establish what your buckets will be. This is a great exercise in understanding where your hard-earned money is going versus where you want it to go.

For example:

  • bills
  • everyday spending
  • savings – this could be one single savings account for long term goals: for example, a holiday or house deposit. Alternatively, it might be more motivating to have separate saving accounts for specific goals – like your next European trip, a new car or those designer shoes you’ve been eyeing up.
  • emergencies – it is recommended to have between three to six months of expenses set aside for the unexpected.

2. Set up your buckets

You may need to talk to your bank about your accounts. P&N Bank customers can easily open new accounts by logging in to internet banking or using the P&N mobile app. Consider:

  • the interest paid on savings accounts and how often you’re likely to withdraw from them (as this will impact things like bonus interest);
  • how many different accounts you need; and
  • how easily you can move funds around as needed.

3. Now fill those buckets

This means working out how much your bills are, what your everyday expenses are (or what you are aiming for them to be) and then dividing up what is leftover.

You could be surprised at how much you actually spend on non-essentials like takeaway food (and this may be something you address in this process).

A very general guide could be:

  • 30% of total income towards rent/mortgage repayments,
  • 30% goes on bills including groceries,
  • 20% for ‘splurge’ or other items that are just part of everyday life; and
  • 20% for savings.

4. Manage your buckets

Each time you are paid, allocate your funds to the various accounts, or better yet, set up auto transfers. You may need to assess how much you are allocating – for example, you could find that you can save more by reducing some everyday expenses, or that you need more for your everyday.

But remember – you can’t borrow from other buckets all the time. If you do that, you may as well not use buckets at all!

Bucket budgeting is one way for you to track your spending and allocate your money wisely, while helping you set and stick to realistic short and long-term saving goals. It also helps ensure you are prepared for any potential issues that may arise. Of course, just like any good budget – or diet - how successful you are will depend on how closely you stick with it. If you dip into the money set aside for your bills to buy a new jacket, you may quickly find yourself off track.


For more budgeting information, you can chat to our friendly branch staff or call us on 13 25 77. Alternatively, you may find our mymo by P&N Bank budgeting app helpful - check it out.

Banking and Credit products issued by Police & Nurses Limited (P&N Bank) ABN 69 087 651 876 AFSL/Australian Credit Licence 240701. Any advice does not take into account your objectives, financial situation or needs. Read the relevant T&Cs, before downloading apps or acquiring any product, in considering and deciding whether it is right for you. The Target Market Determinations (TMDs) are available here or upon request.