Three Buckets of Allocation ... or How to Start Saving Money ...

An important principle every ambitious person should be following is: Ordinary people work for money, rich people have money work for them.

Of course, you have to cover all of your monthly expenses, but what separates the normal from the rich is in the way any excess is used. Those people who want to be successful won’t be wasting their money on things which can’t yield an income later on. Make money work for you and the yield will be so great you will have no problems buying anything you could ever want. All you need is patience and the will to plan for the future.

Eliminating Debt

Debt is the enemy of all savings. It’s sucking the life out of your finances and preventing you from moving forward. Credit card debt, loan debt, or even personal debts with friends and family, these are all just as bad. Let’s take an example provided by Michelle Gaut of Happy Living Magazine on credit card debt:

“If you are already in debt and are paying 17 percent interest on credit cards, it does not make sense to make the minimum payment on your cards while putting money into an account that has a four percent return.”

You are going to have to take a massive step to cover the debt and make money at the same time. Even if you do manage to do it you are still losing so much, so it’s not really a sustainable plan.

Before embarking on any serious savings endeavor, cut off as much debt as humanly possible. Pay off the most volatile debts first, such as payday loans and credit card debt. Don’t be afraid to turn to close friends or family members for an interest-free loan to pay off these debts, it’s going to put you in the green in the long run.

Look at Yourself

Do you think the only way of living is the way we get taught in school? Like 99% of the world’s population you will blindly believe what schools and parents say about living. The Wall Street Protests of 2012 saw protestors young and old complaining about the actions of the rich 1%. Now, the reason these 1% made it there in the first place is because they took those traditional living standards and obliterated them. They carved out their own paths and now they are the definition of success.

But realistically you, the man in the street, aren’t going to discover the next big thing. You are just a person with a normal family looking for a better life. Enhance yourself by looking at the way you live first. If you can’t advance forwards for lack of knowledge or funds look inwards and improve yourself in this area.

Abundance is what you want to gain, but in truth, it’s what most people have already gained. The difference between them and the 1% is they can’t live within their means. If you want to save, you must adapt to the times and live within your means. According to The Lost Decade of the Middle Class, 85% of middle-class adults in the U.S. say it’s now harder to maintain their standard of living than it was a decade ago. The problem here is they are attempting to maintain it. Stress, pain, and frustration are three things these people are going to be dealing with. Yet if they simply shifted downwards they wouldn’t be having these problems. Is their difficult situation partly caused by their own egos? Perhaps, but the reason doesn’t matter, all that matters is the result.

Anybody of any class can cut down to save money, in truth. Ask yourself some of these questions:

• Do I really need to take a second holiday this year?
• Is it necessary to have four TVs in the house?
• Should I really be ordering in dinner at least once a week?
• Can I get a better deal on the food I buy?

You don’t have to be poor to be a good saver. Even if you are already blessed to be a part of the successful 1% you can turn to frugal living to save money. Savings start at home. Begin with your own expenses, before looking into how you can turn your excess into some serious wealth. Do not just get rich, stay rich with proper savings.

The Three Buckets

Now, we are going to take some advice from Anthony Robbins, the creator of the Three Buckets system, which he regularly purports to people during his personal coaching sessions. Imagine yourself 5 years into the future, what did you need to do in your life to get that kind of abundance?

The chances are you had to risk some money to make more money. Yes, those saving tips above are a fantastic way of giving you some money to play with, but there’s no financial freedom there. It’s a tiny stream of income for tiny things, but even the smallest snowflake can cause an avalanche.

1. Security Bucket

Your first bucket is the security bucket. Only you know exactly how much you can afford to lose. Furthermore, the amount you place into your security bucket is determined by your income and how much you are able to save. For an average income, it’s probably a good idea to have 30% of your disposable income thrown into it. But this figure should be increased as you get older since you have fewer chances to make it big.

This bucket can cover any lost investments, the cost of living for at least six months, retirement funds, and any insurance policies you might have.