Article Series: Taking Your Barefoot Investor Buckets to the Next Level with the MoneyFormula app!

MoneyFormula App

PART 1 - Setting Up Your Barefoot Investor Buckets

Set up Your Barefoot Investor App Buckets

Ready to start? We jump straight in with the easiest way to set up your Barefoot Investor buckets within the MoneyFormula app.

In PART 1 of this article series we'll cover

1. Your Barefoot bank accounts

2. Setting up your buckets

3. Your Blow Bucket in action

4. Your bucket percentages

5. 20% to Fire Extinguisher?

6. Realistic bucket amounts

TIP - New to MoneyFormula? Find out how it can help you with your Barefoot Investor finances by referring to the Barefoot Investor Overview.

Article Series: Taking Your Barefoot Investor Buckets to the Next Level with the MoneyFormula app!

OVERVIEW - The Barefoot Investor + MoneyFormula App

PART 1 - Setting Up Your Barefoot Investor Buckets

PART 2 - Your Barefoot Mojo and Grow Buckets

PART 3 - Your Barefoot Budget and Spending Review

PART 4 - Your Barefoot Fire Extinguisher Goals

Show less

Please Note: MoneyFormula is independent of, and is in no way affiliated with, endorsed by, or associated with Scott Pape or The Barefoot Investor. This information on this page is for illustrative purposes only and should not be interpreted as an official endorsement or partnership. You are not required to have read The Barefoot Investor to use the MoneyFormula App.

If you've read barefoot investor or would like to manage your money like a pro, MoneyFormula will make your life easy and help you save! My experience has been fantastic, and any questions I had, Matthew was able to answer efficiently. Could not reccomend MoneyFormula enough!

1. Your Barefoot Bank Accounts and the MoneyFormula App

Part of the barefoot investor approach is to create five physical bank accounts to manage your money and in this article we'll see just how easy it is to track them in the MoneyFormula app.

Your Barefoot buckets - the app allows you to easily capture all your physical bank accounts.

But first, let's do a quick recap in case you are a little rusty on your barefoot bank account names...

Fire Extinguisher

Smile

Splurge

Daily Expenses

Mojo

Fire Extinguisher gets 20% of your income to help you achieve your financial goals like paying down debt, creating an emergency fund and crushing your mortgage.

Smile gets 10% of your income to help you save up for those longer term rewards like holidays or a new car.

Splurge gets 10% of your income you can spend on whatever you want, guilt free, and a great way to keep the whole thing fun.

Daily Expenses gets 60% of your income to pretty much cover everything else you spend money on from food and clothes, through to bills and mortgage payments.

The fifth account Mojo is used as a safety net (or emergency fund) to save you reaching for the credit card when an unexpected expense or financial crises comes along and we will cover this in more detail in PART 2 - Your Barefoot Mojo and Grow Buckets

Entering your Barefoot bank accounts into the MoneyFormula app

When you start using the MoneyFormula app to manage your Barefoot Investor journey the first thing you are going to want to do is set up your first FOUR barefoot bank accounts.

You don't need to add the Mojo account as this will be done for you automatically and we will go through this in PART 2 - Your Barefoot Mojo and Grow Buckets.

Barefoot Investor App Create Bank Account

Your Barefoot buckets - enter each of your barefoot investor accounts into the app.

Adding your first four accounts will only take a couple of minutes and all you have to do is select the Account List from the menu then selecting the +Add button to enter each of the Bank Accounts.

MoneyFormula also lets you track every other asset, debt and account you may have, but for now we will just add the barefoot accounts to get us started.

QUICK TIP

Want to follow along with this article?

You can also start entering your details, set up your Barefoot Accounts and calculate your correct Bucket Percentages straight away.

Simply sign in below (any device) or download the mobile app from the app stores!

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2. Setting up your Barefoot Buckets

Now that we've set up the physical bank accounts we are going to look at how to manage the money flowing to each of them.

MoneyFormula uses the concept of bucket money flows to help take part of your income each month and allocate it to your different accounts, so that it doesn't just flow straight through to your expenses, and, well ... get spent.

Your Barefoot buckets - the app uses money flows to split your income into your buckets.

Your Barefoot Bucket Names

By default MoneyFormula uses its own names for these money flows ("Wealth Goals", "Rewards Savings", "Fun Spending" and "Expenses"), so you may want to change over to the barefoot investor bucket names (for example: fire extinguisher, smile, splurge, etc.) or any other bucket names you are currently using.

Changing the names only takes a couple of seconds and all you have to do is select the User Account page from the menu and under Preferences select "Edit Money Flows".

Your Barefoot buckets - the app lets you change the barefoot investor bucket names.

You can then customise your buckets name to anything you want and MoneyFormula will use them throughout the app.

Barefoot Investor App Customised Barefoot Bucket Names

Your Barefoot buckets - edit the money flows and buckets names to suit your needs in the app.

The following table is a quick reference of the MoneyFormula and equivalent Barefoot Investor name to get you started and you can change as you please using the screen above.

MoneyFormula

Barefoot

Income

Wealth Goals

Fire Extinguisher

Rewards Savings

Smile

Fun Spending

Splurge

Expenses

Daily Expenses

Safety Net

Mojo

Wealth View

Grow Bucket

3. Your Blow Bucket in action

With the money flows and bucket names in place the next thing to do is to enter your income amount so you can see how much should be flowing to each bucket.

From the menu select Current Budget to bring up your budget details and Edit the income amount.

Your Barefoot buckets - the app lets you set up your income and bucket amounts.

In my example I will enter an income of $10,000 a month as it will make the numbers a little easier to follow later in this article.

Barefoot Investor App Enter Budget Income Amount

Your Barefoot buckets - enter your income into the budget details in the app.

Once you save the budget you can see the income amount, the money flowing to the three buckets below it (all set to $0) and by default all of our income going to our expenses.

Your Barefoot buckets - the app will show you how much of your income is flowing to your buckets.

4. Your bucket percentages

To find out how much money we should be placing in each bucket let's head over to the Money Flows section and take a look at the Target % tab where MoneyFormula calculates the amount required based on the income entered.

So for the $10,000 income I entered above we need to allocate...

$2,000 to Fire Extinguisher (20%)

$1,000 to Smile (10%)

$1,000 to Splurge (10%)

$6,000 to Expenses (60%)

Barefoot Investor App Target Bucket Amounts

Your Barefoot buckets - the app will automatically calculate your bucket amounts based on the percentages and your income.

5. Twenty Per Cent to Fire Extinguisher? How?

If the first time you read The Barefoot Investor you fell off your chair when you get to the part that says

Barefoot App 20 Per cent to Fire Extinguisher Bucket

"... allocate 20 per cent of your take-home pay from Daily Expenses to your Fire Extinguisher account"

Don't worry, you are not alone. To go from 0% to 20% on day one is big ask!

The good news is with MoneyFormula you can start with any amount to your fire extinguisher (even as little as $50 or $100 a month) and the 20% is seen as a target percentage you will work towards.

Of course, if you can move the 20% to your fire extinguisher (and 10% to smile and 10% to splurge) then that's fantastic and just use those figures in the example below.

6. Realistic bucket amounts

In this example, instead of $2,000 a month to our fire extinguisher bucket (the 20%) we are going to start with $200 a month, just so we can go through the process of setting things up.

If you go back to your current Budget (where you entered your income) you can now allocate amounts to each bucket.

Barefoot Investor App Initial Bucket Amounts

Your Barefoot buckets - enter realistic bucket amounts you can afford into the app.

Once you save the changes you can see the three Money Flows in your budget and MoneyFormula automatically puts the rest to your expenses.

Barefoot App Initial Buckets Budget Amounts

Your Barefoot buckets - the app will show you your current income amount going to your buckets and the rest to expenses.

The idea here is you will then go and automate these payments in the real world (by EFT, direct debit, etc.) so that they are guaranteed to happen.

With the budget amounts set up, if we now switch back to our Money Flows and have a look at the Current % tab it will show you the amounts from the budget along with the actual percentage of your income you are currently allocating.

Your Barefoot buckets - the app will calculate your current bucket percentages based on your realistic amounts.

So for three amounts I entered above we can see...

$200 to Fire Extinguisher is 2%

$100 to Smile is 1%

$100 to Splurge 1%

$9,600 to Expenses is 96%

You can also click on the Both tab to show you a comparison between the current percentages and target percentages so you can see what it will take to reach your target.

Barefoot App Buckets Current Target Percentages

Your Barefoot buckets - the app will compare current and target calculated bucket percentages.

If you don't start with the full 20% allocated to your fire extinguisher then it's important to keep adding to the amount as your finances improve.

To help you track your progress Money Formula gives you a rating based on the percentage allocated to your fire extinguisher wealth goals along with a progress chart.

Barefoot Investor App Bucket Current Rating

Your Barefoot buckets - the app will show your current rating and help you track your progress.

With our example of $200 a month (2% of income) we are sitting at Level 2, with the idea being to get to MoneyFormula Level 5 - "Unstoppable" when we allocate 20% of our income to our fire extinguisher.

What Next?

In this article we've covered the basics of setting up your barefoot investor bank accounts and buckets within the MoneyFormula app.

PART 2 - Your Barefoot Mojo and Grow Buckets

In PART 2 - Your Barefoot Mojo and Grow Buckets we are going to look at the Mojo and Grow buckets that are often overlooked, but that play an important part in protecting and growing your finances, and we'll see just how easy they are to manage using MoneyFormula.

The Barefoot Investor book

If you have come across this article and you are not one of the million+ readers who have read The Barefoot Investor then you should probably head over to Scott Pape's website and grab a copy. Find out what all the fuss is about with his enjoyable and down to earth approach to finances and his focus on date nights, serviette strategy, unique bucket names and simple barefoot steps.

Article Series: Taking Your Barefoot Investor Buckets to the Next Level

OVERVIEW - The Barefoot Investor + MoneyFormula App

PART 1 - Setting Up Your Barefoot Investor Buckets

PART 2 - Your Barefoot Mojo and Grow Buckets

PART 3 - Your Barefoot Budget and Spending Review

PART 4 - Your Barefoot Fire Extinguisher Goals

Show less

For more information on how MoneyFormula can help you with your Barefoot finances refer to the Barefoot Investor Overview.

Don't Miss Out!

See for yourself why MoneyFormula is the best Australian budgeting app for your Barefoot Investor finances!

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Simply sign in below (any device) or download the mobile app from the app stores!

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PLEASE NOTE: The information in this article is general in nature. It does not take into account your personal objectives, financial situation or needs. Please speak to a qualified financial adviser if you need specific advice on your finances. MoneyFormula / HomeMoneyManager operate independently of, and are in no way affiliated with, endorsed by, or associated with Scott Pape or The Barefoot Investor. The information provided is for illustrative purposes only and should not be interpreted as an official endorsement or partnership. The Barefoot Investor is a trademark of Scott Pape. All rights reserved. This page uses the term for descriptive purposes only, and no claim of ownership or affiliation is made.