Financial Strategy

Disclaimer: This content is for educational and informational purposes only and does not constitute personalized financial advice. Investing involves risk, including the potential loss of principal.

The 3-Bucket Strategy

In Anthropism, achieving financial peace of mind and self-reliance is key. Financial health gives you the freedom, stability, and breathing room to thrive personally and support others.

A proven, straightforward framework to achieve this is the 3-Bucket Strategy (originally developed by financial planner Harold Evensky). This system divides your wealth into three clear steps:

Bucket 1: Fixed Expenses

• Goal: Cover your recurring bills and everyday living costs.

• Target Amount: 1.5 months of fixed expenses.

Bucket 1 stays in your checking account to hold 1.5 times your monthly expenses. This ensures all automatic payments and bills clear smoothly, so you never have to stress about the exact timing of your paychecks.

Bucket 2: The Emergency Fund (Savings Account)

• Goal: Safety net for life's unexpected turns.

• Target Amount: 3 months of living expenses.

Parked in a savings account, this bucket acts as your cash cushion for emergencies, such as sudden home repairs, medical bills, or a temporary gap in income. It guarantees that your basic needs remain protected no matter what.

Bucket 3: Wealth Building (Investing & Growth)

• Goal: Put your money to work for the long haul.

• Target Amount: All overflow funds from Buckets 1 and 2.

Once your first two buckets are full, any extra cash flows into Bucket 3 to build long-term wealth. You can reinvest a portion of these returns to keep growing your portfolio while using the rest to support community efforts. To keep your risk profile as low as possible, consider allocating these funds across:

• Sustainable Investing
  A reliable, low-risk long-term approach is making regular contributions to a broadly diversified, ESG-focused index fund, such as the iShares S&P 500 ESG (or similar sustainable funds from other providers). This gives you exposure to companies meeting strict environmental, social, and governance standards. Historically, these index funds have generated average returns of 6% to 8% per year.
  
  

• Platform Security
  Choose a brokerage platform covered by the European Deposit Guarantee Scheme, such as Trade Republic (or another platform of your choice). This protects your funds up to €100,000 per person in the event of bank insolvency.
  
  

• Interest on Uninvested Cash
  Many modern platforms also pay monthly interest on your uninvested cash balance, putting even your idle money to work.

Disclaimer: This content is for educational and informational purposes only and does not constitute personalized financial advice. Investing involves risk, including the potential loss of principal.