Trichy Money: Money Buckets for Personal Finance Management

There are various money buckets we need to keep the money, when it comes to money management. Here are the buckets, I could think of.

Income Bucket - is where all the income comes in. This would be the starting place of the money in our account. From here, all the buckets would get the money.

Debt Bucket - is where debt payments would go. Like Home Loan, Auto Loan, Personal loan would come under.

Expenses Bucket - is where the day-to-day expenses and planned expenses would go in.

Asset Bucket - is where the assets would come under.

Short-Term Bucket - is where the emergency funds would come. For example, normal savings account or cash at home or checking account money, which is easily accessible would be under the short-term bucket. Immediately accessible!

Medium-Term Bucket - is where next level of emergency fund is available. For example - if you have a not-so-easily accessible high-yield savings account - this would be the right bucket.

Long-Term Bucket - is where the retirement accounts - for both employer sponsored and individual retirement accounts and any other long-term accounts would come under.

Worst Case Bucket - is where all the insurance accounts would come under. ULIP products, term insurance and endowment insurance plans etc.,

Goals:

Go towards the goal of making Debt Bucket empty;
Increase the Income bucket;
Expenses has to be reduced;
Asset bucket has to be increased gradually;
Long-term bucket has to be filled gradually;
Short-Term and Medium Buckets has to be filled aggressively;
Worst Case Insurance is always mandatory if are the breadwinner and you have dependants.