“I tell all my clients about the 3 buckets of financial planning.”
#1 – Emergency
Have at least 3 months of savings set aside. This money should not be touched except for emergencies and should be held in a separate savings account, NOT your checking account. It is there for emergencies and to keep you out of debt.
#2 – Goals
This bucket is where you save money for larger purchases like cars, houses, vacations, toys. Rather than going into debt and paying interest, you earn interest and buy your goals with cash. Think of all the interest you’ll save. You can even have an account for each goal. Each goal could have its own investment style and timeframe.
#3 – Retirement
Determine the proper account type (401k, Roth, Traditional, Deferred Comp, IRA etc), contribution amount, and investment allocation, and put your retirement plan in motion. This bucket of money is only used for retirement, never emergencies. If you have the other 2 types of accounts set up, you’ll never need to touch this money and you can let it grow and grow for retirement.”
The difference between the people who achieve their goals and the ones that do not is simple…they planned.
Let’s have a conversation about the 3 Bucket Principle to help make your goals a reality.
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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.
This material was prepared by LPL Financial, LLC.
