Let's recap how buckets!
At Frollo we use three buckets to categories where and how to budget.
Living expenses are those that just flow out of your bank account each month for rent, bills, groceries and other essentials. Basically, if you can’t give it up for a month, then it’s probably a living expense.
Our guide for living expenses is 60% of your income. Frollo will prepare your average spend for you, and then all you need to do is confirm an achievable number for your plan. (If this is well over 60%, don’t worry. We’ll help you find some solutions).
Lifestyle expenses are those that also flow out of your bank account – the difference is that they often put a smile on your face!These expenses include restaurants, taxis, beer, wine, your morning coffee, or yet another item for your wardrobe.
Our guide for lifestyle expenses is 10% of your income.
If you find that you overspend in this area, we recommend you take up one of our challenges! These money hacks are developed by the Frollo community and they really work. So far this year, they have helped our users save 100,000s of dollars.
Last, but by no means least, are your savings. We prioritise savings because they provide a financial cushion – and just like most cushions, they make life that much more comfortable.
Savings guide is 30% of your income. If you commit to your savings goal, it will become easier to make the small sacrifices in lifestyle or the changes in living needed to reach your ultimate financial goal.
A specific bucket is assigned, based on the category selected for a particular transaction. For example, ‘Cafes and Coffee’ is assigned to the lifestyle bucket, while ‘Groceries’ is assigned to the living bucket.
Now for tagging!
Tagging gives you the additional ability to filter on your transactions. Adding a tag can help you track specific expenses such as insurance (home, car, health) which would be bucketed under the same category.
This can help with tracking expenses for:
- Financial year end activities
- Making changes to your living (fixed) expenses, for example comparing or changing service providers to get a better deal
- Making changes to your lifestyle (variable) expenses, for example identifying within a category where you are spending the most and where you can save
- You can also tag against income streams, for example create a tag #cash-pmt against Other Income for one off payments