Scott Pape’s ULTIMATE MONEY SAVER GUIDE
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.
INTRODUCING THE SERVIETTE STRATEGY
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:
THE BLOW BUCKET
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”