The Barefoot Investor

The Barefoot Investor is an Australian farm boy’s no-BS guide to taking charge of your personal finances with a simple system focused on eliminating debt, living in the now, and still retiring in peace.

In most couples, the men love to deal with the family’s finances. Moving money around feels powerful, no matter how little you’re shoveling from left to right and back. Whether traditional gender roles apply or not, your partner may not love spreadsheets, budgeting and investing as much as you do, or vice versa.

However, one of the first things Scott realized about personal finance is that it’s important to have both parents involved. This, in turn, requires a system that is simple enough to understand and explain in a few minutes. That’s why Scott came up with the serviette strategy. It’s a 3-bucket structure to manage all incoming money and it fits on a single napkin.

The 3 tiers are:

Blow. This is the bucket for all your everyday expenses, a bit of splurging, and some emergency money. Mojo. A place for long-term savings in case of a bigger financial rough patch. Should ideally be 3 months of expenses. Grow. Where your retirement and wealth investments go.

You can set up the entire system with five bank accounts:

Daily. 60% of your income goes here to cover rent, food, mortgage, etc. Splurge. 10% is for short-term fun treats, like going to the movies or a new handbag. Smile. 10% for long-term rewards, like a vacation. Fire Extinguisher. 20% used to stuff burning holes in your pocket, like credit card debt. Mojo. An account with a separate bank, where all extra cash goes, for example from overtime hours or a garage sale.

The big trick is directing your money where it’s supposed to go before it gets there. With this system, you can manage your finances in less than an hour per month, even if you don’t like dealing with it.

Once you’ve set up your buckets, Scott has an interesting take on how you can instantly build momentum: Take a pair of scissors and cut all your credit cards into tiny pieces. Paying off your credit card debt first is a common strategy. It’s usually small enough to be manageable, but big enough to make you feel you’ve accomplished something meaningful. However, by destroying your credit cards first, you eliminate the possibility of racking up more debt with them while you’re trying to catch up. Once you’ve burned those bridges, it’s time to get cracking. Call your bank and tell them about an 18-month zero interest offer from [insert competitor bank.] You might not have that, but you don’t need to. As long as it gets…