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THE SERVIETTE STRAT­EGY Date: Novem­ber 1, 2012 Lo­ca­tion: Rom­sey Pub (Rom­sey, Vic­to­ria) “HERE’S how we’re go­ing to man­age our money,” I an­nounced to my wife, Liz (on our very own Bare­foot Date Night).

“Oh re­ally?” she said, eye­brows raised, head cocked to one side.

See, dur­ing the years that Liz and I had been “liv­ing in sin”, as my grand­mother put it, we’d kept our money sep­a­rate, split­ting things roughly down the mid­dle.

Yet a month out from our wed­ding I knew it was time to have “the talk”.

To suc­ceed over the long term, I knew I had to come up with a sim­ple, has­sle-free plan that op­er­ated on au­topi­lot (for Liz) yet moved us for­ward and built our wealth (for me).

“You’re talk­ing about putting us on a bud­get, aren’t you?” said Liz, fold­ing her arms. “Well …” “Let’s get one thing straight right here. I will not have you dic­tat­ing ev­ery last dol­lar we spend,” she de­clared, giv­ing me a fac­tor-10 stink eye.

I as­sured Liz that I wasn’t ad­vo­cat­ing we cut our own hair or wear acid-wash jeans from Best & Less (though it re­ally is only a mat­ter of time be­fore they come back into style), and I cer­tainly wasn’t sug­gest­ing we fol­low a strict bud­get.

So, I de­cided to make it so sim­ple that I could draw our plan on the back of a serviette.


Be­fore the parma came, but af­ter the cala­mari rings, we’d agreed on the three things we re­ally wanted from our money. Top of our list? To be to­tally fi­nan­cially se­cure. Which made sense. Af­ter all, we were about to get hitched and we were al­ready preg­nant (scan­dal!).

And, ac­cord­ing to Re­la­tion­ships Aus­tralia, the big­gest cause of re­la­tion­ship break­downs is fights about money (and monogamy, but mainly money).

The sec­ond thing we val­ued was the free­dom to travel at least once a year, and to en­joy nice din­ners out with fam­ily and friends.

The third thing was to build our wealth over the long term, so we could wind down work­ing sooner rather than later. (OK, if I’m be­ing re­ally hon­est, Liz was kind of like “meh” about the ex­cit­ing world of long-term investing … but she un­der­stood it came with the ter­ri­tory when she mar­ried the Bare­foot In­vestor.) It was my time to shine. With one fi­nal swig of Carl­ton Draught for courage, I pulled out a pen and drew our new fi­nan­cial plan on the back of a pub serviette. Here’s what I drew: Yes, our en­tire money management plan con­sists of di­vid­ing our in­come into three “buck­ets”:

■ A Blow Bucket, for daily ex­penses, the oc­ca­sional splurge and some ex­tra cash to fight fi­nan­cial fires

■ A Mojo Bucket, to pro­vide some “safety money”, and

■ A Grow Bucket, to build long-term wealth and to­tal se­cu­rity.

Don’t for a mo­ment be fooled by the sim­plic­ity of the pic­ture. Liz and I have used this plan to man­age our in­vest­ment prop­erty, save for our hon­ey­moon, pay off our mort­gage, man­age a busi­ness that earns in­come in in­con­sis­tent lumps, cre­ate a sol­i­das-a-rock emer­gency ac­count and com­pound our wealth.

Even bet­ter: thou­sands of peo­ple of all ages, in­come lev­els and sex­ual ori­en­ta­tions have used my Serviette Strat­egy with stun­ning suc­cess.

Here’s how it works:


Most peo­ple only have one money bucket.

If you’re rent­ing, it’s your trans­ac­tion ac­count. If you own a home, it might be your mort­gage. Ei­ther way, your pay comes in, money goes out, and you “hope”

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