One of the things my friends tease me most about are my savings "buckets." When I save for a goal, no matter how short or long term it is, I create a "bucket" for it.

A bucket is just a separate savings account that I put money into each month, so it earns interest and is earmarked specifically for that one purpose.

I have buckets for things like a new car, a down payment on a house and I think I might be adding one soon for a road bike. (Perhaps triathlons are in my future after all.)

Buckets are a really easy way to save toward a certain goal and they are actually extremely easy to set up and use.

How to Set Up Buckets:

The easiest way to set up buckets is to create separate savings accounts for each item you are saving for.

Some banks make this easier to do than others. I manage all my savings accounts through ING because they make it dead simple to start sub-accounts that you can nickname based on your goal. It takes about two minutes to set up a sub-account through their online banking platform.

Once you have your accounts set up, you need to figure out how you're going to put money into your buckets. You can:

• Send money directly from your paycheck
• Set up a direct transfer from a checking account
• Move the money manually

For me the easiest thing was to set up an automatic transfer through ING. Each month, I have the bank transfer a set amount from my checking account into each of my buckets. That way I can set it and forget it. Once my system is in place, the less I have to mess with it, the better.

Finally you need to decide how much you are going to put into each bucket.

How Much Should You Save?

Well that depends on what your goal is and how fast you want to get there.

I have a bucket for a house down payment, but I don't plan to buy a house any time soon, so I put a pathetically small amount of money into the bucket each month. But I know I will need a car within the next few years, so I contribute a larger sum to the car bucket.

One of the easiest ways to figure out how much you should save toward a goal is to play around with Mint's Goal tool. I'm a huge fan of this tool because it lets you plug in a goal amount and determine how long you want to be saving for the goal and calculates the amount of money you need to set aside each month.


You can experiment with different timelines and different amounts to find a number that is reasonable for you. That's how I figured out how much I should be saving each month for my future car.

Once you set up a goal in Mint, you can link it to the savings account for that specific bucket and Mint will track your savings progress over time. Because I am a huge nerd, I really love seeing my savings progress tracked on the little graph and it motivates me  to be more frugal so I can add a little extra to my buckets each month.


I've been using the buckets savings method for about two years now and it's made it a million times easier to save money when I have specific goals I'm working toward.

In the New Year I'll be re-evaluating my buckets and setting up some new ones for other expenses like vacations, a road bike and maybe some design work on the old blog.

What are you saving for right now? Anything fun and exciting?