How to Set Up Barefoot Investor Buckets with Up Bank

Scott Pape's The Barefoot Investor is the most popular personal finance book in Australian history — and for good reason. The bucket system works. But the book was written when you needed multiple bank accounts at different institutions to make it happen. Today, Up Bank lets you set up every single bucket in one app, with automated splits, in about 15 minutes.

Here's exactly how to do it.

The Barefoot bucket system: quick recap

The Barefoot system divides your income into three main buckets, with sub-buckets inside the first one:

Bucket 1: Blow (daily expenses) — 60%

This is your everyday spending account. Rent/mortgage, groceries, transport, bills. Within this bucket, Barefoot recommends two sub-accounts:

• Splurge (10%): Guilt-free fun money. Coffees, eating out, clothes, whatever brings you joy. Spend it all, every month. That's the point.
• Smile (10%): Medium-term goals. A holiday, new laptop, concert tickets. Things you're saving toward over months.

The remaining 40% of the bucket (60% − 10% Splurge − 10% Smile) covers your fixed living costs.

Bucket 2: Mojo (emergency fund)

Build this to 3-6 months of living expenses, then stop adding to it. This is your safety net — job loss, car breakdown, unexpected medical bill. Don't touch it unless it's a genuine emergency.

For most Australians, this means $10,000–$25,000 depending on your expenses.

Bucket 3: Grow (investments)

This is your Fire Extinguisher allocation (20% of income) once you've cleared high-interest debts. It goes toward:

• Extra mortgage repayments
• Index fund investments
• Additional super contributions
• Any wealth-building activity

The Fire Extinguisher (20%)

The Fire Extinguisher isn't a separate bucket — it's a temporary allocation. Initially, it attacks your highest-interest debt. Once debts are gone, it feeds the Grow bucket. Think of it as your financial fire hose pointed at whatever needs extinguishing most urgently.

Why Up Bank is perfect for this

Up Bank was practically designed for the Barefoot system:

• Up to 50 Savers: Individual savings accounts you can name anything ("Mojo", "Smile — Japan Trip", "Fire Extinguisher")
• Pay Splitting: Automatically split your pay into different Savers the moment it lands. Set percentages or fixed amounts.
• Salary Detection: Up automatically detects your salary and can trigger splits instantly
• Round-ups: Automatically round up purchases to the nearest dollar and send the difference to a chosen Saver
• Instant transfers: Move money between Savers in one tap
• No fees: No monthly fees, no account-keeping fees, no transfer fees
• Competitive interest: All Savers earn the same rate (check the app for current rates)

Step-by-step setup

Step 1: Sign up for Up Bank

Sign up for Up and you'll both get a $10 bonus when you make your first purchase. Download the app, verify your ID, and your spending account is ready in minutes.

Step 2: Create your Savers

Open the app and create these Savers:

1. Fire Extinguisher — 20% of income
2. Splurge — 10% of income
3. Smile — 10% of income (or create multiple: "Smile — Holiday", "Smile — New Phone")
4. Mojo — emergency fund target
5. Grow — investments (once Fire Extinguisher has cleared debts)

Your main Up spending account IS your Blow bucket — the remaining 60% that covers daily expenses.

Step 3: Set up Pay Splitting

Go to Pay Splitting in the app. When your salary lands, Up will automatically distribute:

• 10% → Splurge Saver
• 10% → Smile Saver
• 20% → Fire Extinguisher Saver
• 60% stays in Spending (Blow)

For Mojo: Set a separate scheduled transfer (e.g., $200/week) until you hit your target. Once Mojo is full, redirect that $200 to Fire Extinguisher or Grow.

Step 4: Activate Round-ups

Choose which Saver receives round-ups. Mojo is a great choice while you're building your emergency fund. Once Mojo is full, switch round-ups to Smile or Grow.

Step 5: Direct your bills

Set up direct debits for rent, utilities, phone, and insurance from your Spending account (Blow bucket). Everything from this account is your fixed cost of living.

Worked example: $5,000/month take-home pay

With this setup, you build your Mojo ($15,000 target) in about 15 months from the Fire Extinguisher allocation, then redirect that $1,000/month to wealth building.

Common questions and adjustments

"60% isn't enough for my expenses"

If your rent alone is 35-40% of income (common in Sydney and Melbourne), the standard percentages need adjusting. Scott Pape's advice: the percentages are guidelines, not gospel. Adjust to 70/5/5/20 if needed, or focus on increasing income and reducing the biggest expenses.

"What if I have no debt?"

Lucky you. Your Fire Extinguisher becomes your Grow allocation from day one. Use it for index fund investments, extra super contributions, or saving for a home deposit.

"Should I use Up for investing too?"

Up is great for the bucket system, but for actual investing (Grow bucket), you'll want a separate platform — a brokerage account for ETFs/shares, or additional super contributions through your employer. Use our FIRE Number Calculator to see how much you need.

Making it stick

The beauty of automating with Up is that willpower becomes irrelevant. The money moves before you can spend it. After a few months, you stop thinking about it entirely — the system just runs.

Key tips:

• Don't touch Mojo. Ever. Unless it's a genuine emergency (job loss, medical). Not a sale on flights.
• Spend your Splurge guilt-free. That's the whole point. If you don't spend it, you'll resent the system.
• Review quarterly. Adjust percentages if your income or expenses change significantly.
• Track your savings goal. Use our Savings Goal Calculator to see when you'll hit your targets.