Answers to Your Financial Questions


There are only eleven ways you can allocate your money. Learn more about Ron’s unique approach to financial decision making by watching the video on the 11 Buckets. Or, simply click on a bucket to browse the list of topics that relate to that bucket and to find answers to your questions.

Before the buckets:

Why financial planning? Most of us are responders rather than planners. When we spend, we respond to outside forces instead of planning where our money will go.

There are four truths that make it wise for us to plan rather than respond. They are:

  1. We all have limited resources.

  2. There are always more ways to spend money than money available to spend.

  3. Today’s decisions impact our future. A dollar spent now cannot be used tomorrow for something different.

  4. The longer term your perspective, the better your decisions will be.

Having a financial plan de-clutters our financial picture. Knowing our priorities and our long-term goals lessens the confusion of daily financial decisions. We are free to be unique.

In short, there are only TWO key truths that lead to long-term financial freedom. From a spiritual angle, you must recognize that God owns it all so that you are free from grasping and anxiety. From a practical angle, you must spend less than you earn and do it for a long time. Without a commitment to these two things, you will never be financially free.

The “eleven buckets” financial planning process will do several things for you:

  1. Give you a process for managing your resources

  2. Summarize the various uses of money into a manageable few

  3. Integrate short term and long term planning so that you see the trade offs and benefits

  4. Create order for you so that you are more free from guilt or confusion

Before we get started, let me communicate something clearly to you: Money is symptomatic and emblematic. Every financial decision you make reveals something about your priorities. Accumulating wealth is never a valid end in itself. Therefore, the process of financial planning will drive you to discover your priorities and your values. Financial planning is a gift that will help you to see where your life is in balance and where it is out of balance with your desires and goals.

With every financial decision you make, ask yourself, “What am I really trying to accomplish?” If you take away the dollar layer and get to the underlying purpose, you’ll learn so much!

Spend some time thinking about your money and your priorities. If your checkbook were the place that revealed your heart, what would it show? What would you want it to show?

What is a bucket?

A storage unit where money goes

It is one of the possible uses of money

Remember – each bucket or use is legitimate in God’s eyes. He owns it all, and these are all of the places you can put His money.

Remember – every financial decision affects every other financial decision. Once you put money into one bucket, you cannot put it into another one.

Remember –the goal is to eliminate buckets over time and live more freely out of your priorities.

Remember – God uses the process, not perfection. Expect the detours!

Money is symptomatic. Every financial decision you make reveals something about your priorities. The process of financial planning will drive you to discover your priorities and your values. Spend some time thinking about your money and your priorities. If your checkbook were the place that revealed your heart, what would it show? What would you want it to show?

Short Term Buckets
The five short-term buckets represent the areas where you spend money each day. Only two of the buckets are “productive” in nature: giving and saving. The other three are either consumptive (lifestyle) or required (taxes and debt). When you know your spending level in those five areas, it is possible to control that spending so that your cash flow margin (saving and investing bucket) grows.

Long Term Buckets
The six long-term buckets are your financial dreams and goals. You may have some or all of them as your personal goals. Once you define your goals, you can determine how much money you need to be saving in the “investment / savings” bucket in order to meet them.

The Process:
The 11 Buckets model is dynamic, not static. It implies a five-step process that you can repeat over time:

  • Determine where you are currently spending money (by looking at the short term buckets.)

  • Set long-term goals (by examining the long term buckets).

  • Prioritize those goals.

  • Implement a spending plan to control your cash flow and grow your margin (the “investment/ savings” bucket.)

  • Periodically, you can re-evaluate your current situation and your long-term goals so that the two remain complementary to one another.

The Five Short Term Buckets:

The five short-term buckets are:

  1. Giving

  2. Lifestyle

  3. Short Term Debt

  4. Taxes

  5. Save & Invest

All of your income will be divided among these five areas. Two things determine how it is divided: your commitments and your priorities.

Commitments come with various family situations and often arise out of past financial decisions. The commitment to repay debt has to do with a past decision. The commitment to clothe and feed my five children had do to with my family situation.

Priorities are determined by your values. Have you spent time with God to determine His will in various areas of your life? Many American Christians would assert that they prioritize giving, but do their financial choices reflect that priority? If not, this planning process can help re-order spending decisions to be more in line with priorities.

Of the five short-term uses of money, two are productive in nature and three are consumptive. Both saving and giving will yield a harvest later on; taxes, debt, and lifestyle represent areas where you money is consumed by the spending decision.

Scripture gives many guidelines about these areas of money management. However, it gives very few commands. Determining your flow of priorities and your commitments best happens as you spend time alone with God and together with your spouse asking for His direction and guidance. He has entrusted His resources to you, therefore He will speak to you about their use in your life.

When you build your Save & Invest bucket, you will have money that can flow to the long-term buckets.

The Six Long Term Buckets:

The six long-term buckets are:

  1. Financial Independence

  2. Family Needs

  3. Pay Off Debt

  4. Lifestyle Desires

  5. Giving

  6. Start Own Business

These buckets are filled as we save money in the short term.

Financial Independence: This means that your resources will eventually generate enough income to fund all of your short-term objectives, excluding savings. (If “enough” has been saved, you will no longer need short term savings.) When you know what your short term needs are, you will also be able to calculate how large of an investment fund you would need in order to be financially independent.

Family Needs: If you want to help put your children through college, want to help out a relative, need to care for aging parents, or have a child who requires long-term care, this bucket would apply to you.

Pay Off Debt: If you desire to pay off your mortgage or another major area of debt, this bucket would be applicable to you.

Lifestyle Desires: This bucket could contain many things, depending on your unique desires. Perhaps you desire a different home, a particular vacation, a different car, etc.

Giving: Perhaps you would like to have margin in your finances to give to a ministry or to give more than you are giving now. If so, this bucket would apply to you.

Start Own Business: Many people have a goal of funding their own business. If that is your dream, you would use this bucket as a part of your planning.

As you can see, some of these buckets apply only in certain situations. The process of goal setting will help you determine your “finish lines” so that you will know how much is enough for your financial future. (Goal Setting Worksheet)

What is the financial planning process?

We want to outline the stages of the financial planning process and help you with a step-by-step guide.
Step 1: Summarize your present situation (Financial Physical.xls)
Step 2: Establish your financial goals (Goal Setting Worksheet from SFM)
Step 3: Prioritize goals
Step 4: Create margin via a spending plan (Spending Plan.xls)
Step 5: Control your cash flow

As you move into the in depth process of creating a plan for yourself, please remember several things:

  1. Process: This is a process, and it will take time. Count on spending time on some basics: committed spousal communication, prayer about God’s direction for you, and an ongoing assessment of your financial situation. Don’t expect perfection and don’t expect a quick fix. You will learn so much about yourself by digging into the process, and you will find that the reward is great!

  2. Interdependence: Remember that there are no independent financial decisions. As you decide to put your resources in one bucket, you’ve effectively decided NOT to put them in the other buckets. This is the reality of money management.

  3. Perspective: Also, remember that the longer term your perspective, the better the financial decision will be. A close friend once defined financial maturity as, “being able to give up today’s desires for future benefits.” If you make a choice to delay gratification today on behalf of a future need or priority, you’ve probably made a wise financial decision.

  4. Goals and Priorities: Finally, remember that decisions determine destiny. Every choice you make in the present will determine, in part, your financial destiny. Therefore, your key to successful financial planning is knowing where you are going (your goals) and knowing how you plan to arrive there (your plan). Money is just a resource that will facilitate the accomplishments of your desires and goals.