Bucket #1: Building Your Financial Foundation With Liquid Assets

Before we talk about growth or risk, we have to talk about liquidity.

Liquid savings are the first pillar of the Three Bucket Strategy. This bucket holds the money you can reach without delay, without penalty, and without stress. It is your first line of defense against emergencies and your first source of opportunity capital when life presents a good deal.

Here are some examples of liquid assets to consider for Bucket #1.

Many Americans struggle here. They talk about saving, but too often good intentions never become action.

That is why I encourage people to start simple.

Open a savings account.
Automate your deposits.
Pay yourself first.

Saving is not about luck or willpower. It is a habit, and habits grow with consistency.

One of the most important concepts I teach about saving is something I call the Profit Principle. Put simply, the profit principle says that the profit from your labor is the money you save. If you are not saving, you are working for zero profit. Sounds insane, right?

And yet, many people do exactly that for years at a time.

Your initial goal with this first bucket is to build at least two months of your gross income in liquid form. Later, as you move through our Five Levels of Financial Freedom, you will grow that to six months and diversify it for protection against inflation.

Remember, your liquid savings are not an investment. Instead, Bucket #1 provides you with stability and gives peace, margin, and breathing room. Without filling up this bucket first, everything else becomes harder.

In an upcoming article, we will move on to Bucket #2 in more detail. Stay tuned!

Blessings!

Comments are closed.