Three Saving Buckets

Everybody knows we should be saving at least a small portion of money. If you are spending everything you make, you know the stress of that. I won't focus on that today. But if you are able to save anything, even the smallest amount, what you are doing with it? Are you excited for what that means? Today let's look at three separate, and I do mean separate, categories of saving. The first isn't exciting but it matters the most! The second is a little technical but will help you very soon. And the third is fun and risky, but okay if kept in its proper place. In the end, let's be savers. Let's see that grow and create less stress and more ability to give!

- Why don't more people save money at the end of the month?

- What do you think could motivate someone to make sacrifices and start saving?

- What is bucket 1, and why does it need to be easy and automatic?

- What is bucket 2, and how does it make this next year a lot easier?

- What is bucket 3, and why must you never let the wrong funds get into it?

Transcript

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Welcome to the Excel Still More podcast. I am your host, Chris Emerson. I'm here to encourage you in your walk with God. Thank you for joining in. Today's podcast is sponsored by a wonderful company, Creation to Revelation. This group of Christians believe it is extremely important that we teach the Word of God to our kids. They have original graphic illustrations from the beginning of the Bible to the end, featuring the beautiful and consistent presence of Jesus throughout. You can explore all of that at CreationToreation.com. I am so thankful you're here, so let's get started. Our topic today will deal with the best way to manage funds that you are willing to save. If you can get to the end of the month and have even the smallest amount still available to you, there are some specific things that you can do with that which over time will be of tremendous benefit to you. It will relieve stress in your life, it will begin to accumulate for your future, it will make immediate needs less urgent, and ultimately, as Dave Ramsey is always saying, can position you to be a huge help in the lives of people around you. The truth is a lot of the needs in Christians' lives and in our neighbors' lives are monetary. And if I am spending everything that I earn and I'm not saving anything, or I am saving it, but it's becoming nothing, then how can I position myself to help, firstly, myself when I have need, and maybe more importantly, others. And look, I do mean I've been saving this up for a long time. The three bucket approach that I want to talk to you about is not new for me. I didn't read it in some article earlier this year or discover it a few years ago when John Cunningham and I first began to talk. The things I want to talk to you about have been proven in my life dating back to 2001. I've been building on this three bucket savings approach for 20 years. Like you, perhaps, there were times during those years where I was earning very little, other times when I was earning significantly more. But a consistent approach to taking care of my family's immediate and long-term future has led to some wonderful things. Things that are well within reach for you. So let me be clear about what we are not doing today. I'm not going to use 18 minutes to convince you that you should be spending less than you make. I think everybody knows that. If you're someone who is deepening in debt every month or barely making ends meet, you know that there is a tremendous amount of anxiety that goes along with that. And maybe I can devote an episode in the future to how you can begin to change that. But what I'm here today to show you is if you can change it even by the smallest degree, if you can have $5 left at the end of the month, or $50, or $500, there are very specific things that you need to be doing. And honestly, I think there are people who don't put a lot of effort into cutting back here or earning a little more there because they don't have an exciting or interesting plan for what that might mean for their future. I hope that you will have that today. All right, I have a lot to detail for you today, so let me jump in in this way. I, like so many others, Dave Ramsey included, have a devastating financial story that changed everything. When Summer and I got married in late 1997, I went to work for her dad for a few years, and along the way, he sold me a Kenworth truck, and I went and bought a Travis Aggregate hauling trailer. And at the age of about 20, I started a business wherein my driver hauled rainbow gravel from our location by the San Jacinto River up to the DFW area about four days a week. So in a very short period of time, I had real money in my pocket. Like it was 1999, I was 21, and I think I had like $30,000. So I was feeling pretty good about that. But I knew I wanted to save it and turn it into more. So I heard about this guy who was a friend of a friend. He worked at Morgan Stanley Dean Witter, and he told me that I should invest in Digitas. You know about Digitas, right? Yeah, nobody does. It was one of those small internet companies that was supposed to explode, and he convinced me to put all of that money into a company that about 18 months later completely ceased to exist. He told me, just stick with it, it'll bounce back. It bounced off the table. I don't know, it disappeared, and all of the money was gone. Around that same time, I got out of the aggregate business, went back to school, and then started preaching. So not only had I lost what for me was a small fortune, but I now was not earning enough to replace it anytime in the foreseeable future. But I'll tell you this, it was a lesson learned. And really from that day forward, I started a three bucket system that I still use today. So let's talk about it. Bucket one, that is where money goes that you want to save for long-term goals. If you are 20, these are funds you want to see grow until you are 60. If you are 40, these are funds you want to see grow so that you can benefit from them when you're 65. Even if you are 60 years old, you may be looking at 10 years from now and some goal you have in front of you. It would not be wise in bucket one to invest in companies that no one has ever heard of, to take some flyer opportunity that could turn into nothing. There may be time for that later, and I'll talk to you about it in a bit, but this is something secure, something large and strong, something that I can begin to invest in that will always be there and most likely always be growing. So I started immediately by setting up an appointment with an Edward Jones guy back in 2001 and began investing in mutual funds. I didn't have a lot at the end of each month, but I made sure to have a little, and I had that little bit automatically withdrawn from my account and sent to Edward Jones to be invested. Listen to me carefully. Everyone needs to be investing in bucket one. Maybe it's through your company, I've never had that advantage, but it needs to be set up to be automatic. It needs to be easy, and it needs to be something that doesn't get bought, sold, moved, liquidated, or altered. If you're 20 and you've got 20 bucks a month, do it. If you're 30 and you got 200 bucks a month, do it. If you're 40 and you have well, you get the point. I did that for about 10 years. And then about 10 years ago, someone encouraged me to buy Apple stock. So I kept doing it, except I bought Apple stock instead of mutual funds. And I have never sold a single thing in bucket one. I mean, why would I? I'm 42. This is about long-term goals. Now you might say, well, Chris, there could be an emergency, and that's certainly true. And if it came down to life or death, I can reach out and get some of that. Although, to sound a little bit like Dave Ramsey, he would say, make sure you have decent health insurance, maybe some disability insurance. You might say, Well, that's going to cut into the savings. We don't want to mess with bucket one. We want to forget about it and let it do its thing. And so purchasing insurance to keep you from an emergency situation is just wise. Okay, look, so I know bucket one is super boring, and you're like, I don't even know if I want to listen to the rest of this. That's so basic. Well, look, the other two buckets are a lot more fun and engaging and interactive, but you can't skip the first one to get to them. So you know that John Cunningham is a friend of mine and a sponsor for this program, and everything in my bucket one has been sent to him. I don't want to keep it close to me, that's kind of the point. And his number is at the end of this program if you'd like to call him. What I really love about guys like him is they ask you to look forward to some change in your life, some retirement age, or when you want a second home, or whatever it might be. And then he walks it back and says, okay, here's what we need to do automatically every month. We will let time and growth and the way the market works work for us. And if the Lord blesses you, the health to get there, the money will be waiting for you. All right, so let's talk about bucket two. These are also savings, funds that you're able to keep at the end of each month, but they go to things in your more immediate future. I mean, maybe at the end of the year you have to pay taxes on your home. You need to save for that, right? Maybe you'd like to buy Christmas gifts for your family. It would be nice to have saved for that. Maybe you know one of your kids will need braces in three years. You don't want that to sneak up on you and not have the money to pay for it. So here is how Bucket 2 works. These savings do not get sent off to a financial institution. They are in my standard local savings account. These are funds that I intentionally put back every month because I know that next month or six months from now or this time next year, I will need them. And while if you looked in my savings account, there would just be a number there. I also have a super secret password protected Excel spreadsheet. I've been working the bucket to spreadsheet for about 10 years now. If I opened up that spreadsheet and let you see it, in the top left hand corner, the first row it says charity. When it comes to giving, I want to save every month to accumulate funds that I will have available to give. Underneath that, well, I'll just read for you what I have here. Column two is emergency fund, which I want to get to a certain number. Column three is my taxes and insurance, which I know will be due by the end of the year. Under that is vacation, funds I'd like to save so that I can go somewhere, not be in debt when I do it. I have things like clothing, Christmas, home decor, dentist, HOA, and things like that. Those are all categories where money will be needed. Maybe not soon, but certainly within the next year. So every month I add a little bit to each one of those categories. Practically, it just gets dumped into the savings account. Let's say the savings account goes up $1,000 this month. But I know that a certain amount of that is in the charity category, a certain amount went to taxes, a certain amount went to saving for Christmas, a certain amount went towards dental fees that are probably upcoming. Now listen, I don't want to put numbers on this because the numbers aren't relevant. If you only have $100 a month to work with, put it into some categories that begin to accumulate. Starting, of course, with something beautiful like charity or giving. If you have a much larger amount, designate it to something that matters and then use it for that thing. This year, I think it's kind of cool that that charity portion of bucket two is actually larger than it's been in years past. But by the time we get to the end of the year, it will be given to someone or some organization or something like that. My son had braces last year, and while the payments are monthly, it's nice to know that I can draw that from bucket two instead of my monthly budget. And on a more fun side, when you get to December and you have all the money pre-saved to fund Christmas, that's pretty great. But I can do even better than that. We used to go to Disney World a little more frequently. Every 30 months, we would go to Disney World. So I would save a small but consistent amount of money in bucket two in that category every month for 30 months. And then we would get on a plane and everything was prepaid. How do you think that felt? I have a lot of other stories to tell here. I love it when Summer says, Oh, I'd really like to buy some chairs. I'm like, buy the chairs. She says, Yeah, but the budget. I said, babe, we've been putting back $50 a month for the last three years. Look at that category. Bucket to home is just for you and your chairs. And then she goes and she gets them. This also helps us to be patient for the things that we want and to only buy things that we can afford because of our discipline and our willingness to cut in the budget each month to save with intentionality and also with a lot of really nice payoff. I would love to talk to you more about that. I feel like we need a seminar on it or something, but the rewards in my life have just been very consistent and have eliminated a ton of stress. And I hope that you'll give that a look. So far, it's as simple as bucket one, find someone to invest with and make it automatically drawn out each month. Bucket two, anything you can put aside, put it in your savings account, but have a spreadsheet where you know exactly where it's going, and you can enjoy watching those categories accumulate and meet your goals. Okay, so what is bucket three? What's left to talk about? Well, in truth, you may never get to bucket three, and that's perfectly fine. If you still have funds left over at this point and you don't want to go bucket three style, then just beef up the first two buckets, throw it all in charity, something like that. But people frequently ask me about flyer high-risk investments. What about cryptocurrency, Bitcoin, Dogecoin? What about Reddit companies like AMC or GameStop? What about investing in my buddy's idea to bring back the VHS and open up a blockbuster on the corner? Those kinds of investments are not bucket one investments. Never borrow from your long-term future for things like that, things that can disappear in a moment. Yes, they can grow ten times, but they can also digitas their way out of existence. Be careful not to be drawn to such things and take bucket two money that's supposed to go to your taxes or your kids' Christmas in order to try these things. But if you happen to have some funds left over, and listen carefully, this is money that, if it totally disappeared tomorrow, would have no impact at all on your life. If you wanted to, and I would never advise this, you could go out in the backyard and put all that cash in a bucket and set it on fire just to see what color the flame would be, and it wouldn't change your life at all. Now it's probably advisable to put that cash in the spreadsheet somewhere or send it off, but truth be told, I have taken that bucket three and invested in Bitcoin or a couple of other things, and your conscience has to be aligned and all of that. But sadly, I have people I care for very deeply who have taken funds that their family would need, funds that could have protected their family in the future and bought things like this with it, things like option contracts that demand a sell date where you're trying to time the market, and they have lost money that should have never been put to that kind of risk. Just remember this people who are always at the plate trying to hit home runs strike out a lot more often than they hit that homer. And you can't afford that when it comes to funds that you need for retirement or funds that you need for your family's immediate future. Not to mention that long-term wise investing will outpace all of that anyway. I told you I bought Apple stock in 2011. Go check that out sometime. I think sticking with that because it was in bucket one probably has led to a lot better results than somebody trying to time some penny stock. And again, whether you're 20 or 40 or 60, you can do this. It's not about the size of the buckets, it's about intentionality, wisdom, and planning. And while you may mull some of this over for a while, when it comes to investing and a lot of other things, the person who starts earliest does best. The person who starts now consistently, even with a little bit, almost always comes out better than the person who waited, even though they'll end up having to invest a lot more just to catch up. Look, I know today's episode was super specific and a little bit personal, but after losing everything, I've been working on something for the last 20 years that I know will help you and your family. Become optimistic about your financial future, short term and long, and maybe even excited about that journey by focusing on three saving buckets.life to sign up for the email, order the three-month journal, or just catch up on old episodes. And also, if you are looking for financial advice or future planning, give John Cunningham a call today, 205 913 1720. And remember this whatever you choose to do today in the name of the Lord Jesus, excel still more.