Money and Investing: Three money buckets that structure wealth

This week on Money and Investing, Mitch Olarenshaw and I break down how to structure your money using the three buckets approach, a simple framework that helps you manage cash today while building long-term wealth.

Today’s video discussion focuses on liquidity, growth, and legacy, and how each bucket plays a role at different stages of life.

1. Liquidity Bucket

The liquidity bucket covers short-term needs and financial security. This includes your working account for bills, everyday expenses, and an emergency fund. The goal is to have quick access to cash when income pauses or unexpected costs arise. Start with one month of essential expenses, then build towards three months for breathing space. Cash here is about stability and control, not returns.

2. Growth Bucket

The growth bucket is where money works harder over time. This includes assets like shares, property, ETFs, and other investments designed to grow in value. These funds are not for short term use. They are exposed to risk in exchange for higher potential returns. Time in the market matters more than perfect timing, and education plays a key role before choosing where to invest.

3. Legacy Bucket

The legacy bucket focuses on long term outcomes and future income. This often includes superannuation, long held property, and assets structured for tax efficiency and asset protection. The aim is to reduce debt, build equity, and create income streams that support retirement and future generations. Proper structuring and professional advice become more important at this stage.

4. Key Takeaway

You cannot save your way to wealth. You need structure, discipline, and action. Start with liquidity, move into growth, and build towards legacy. The most important step is getting started, because time either works for you or against you.

For more Info about Money and Investing, you can go to the podcast; The Wealth Playbook: Your Ultimate Guide to Financial Security; and The Wealth Playbook by Andrew Baxter – Audiobook, which is on Audible.

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Disclaimer: Wealth Magnet Pty Ltd (ABN 52 618 868 830) trading as Australian Investment Education is a Corporate Authorised Representative (CAR no. 1255231) of Grange Financial Services Pty Ltd (AFSL No. 488609).

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.