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Barefoot Investor Bank Accounts: Explained

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My first experience with the Barefoot Investor was with my sister. We were going for a coffee and she whipped out an orange ING bank card with “SPLURGE” written in Sharpie right across the front.

She noticed my puzzled glance and proceeded to explain all about her special bank account setup.

Mojo, Fire Extinguisher, Grow…

Initially, I thought she was talking about an Austin Powers movie but all this has to do with different bank accounts, buckets and budgeting. And it all comes from a book written by an Aussie financial expert called “The barefoot investor”.

mojo-baby (1)

Today I’m going to walk you through the Barefoot Investor Bank Accounts and Bucket strategy.

We are going to take you through each of the different account names, types and how to set everything up.

So if you’ve read the book… Or got partly through it and then gave up, and have been left with thousands of different bank accounts open, then this article is for you.

Let’s jump right in. 


Barefoot Investor Basics

At its core, the Barefoot Investor is a new-age way of saving money, using multiple bank accounts and automated transfers to move your money into different ‘buckets’ based on your financial goals.

It’s a much smarter method of saving. Strict budgeting and tracking your expenses on a spreadsheet only works for a very small number of people. By automating your finances, you take willpower out of the equation. That means you can focus on what really matters: getting rid of your debts, buying your family home, and setting yourself up for a wealthy retirement.

But when I told my friend that I was going to be writing an article on the Barefoot Investor, she simply said:

“Ugh, I gave up, too many buckets, too many bank accounts”. Which got me thinking.

Is this a common occurrence for those who’ve read the book?

If you feel a bit overwhelmed by all the different buckets and bank accounts, keep reading. I’m going to break down each bucket and bank account you need and how to use them.

ing barefoot investor


Your Money Mindset [How to Increase Your Savings ASAP]

Before we dig into the details about the buckets and bank accounts, let’s quickly talk about your money mindset – the way you think about money, and what your financial priorities are.

Why is this important?

Because regardless of how simple the Barefoot Investor system is, it still requires work. You aren’t going to pay down all your debts, buy a home and retire wealthy with a brief period of effort. It’s going to take years of commitment in order to achieve your financial goals.

And there are going to be hard times, where you’ll be tempted to throw it all away and go back to the old way of doing things. So you need to have a good reason why you’re doing this.

Identify (and master) your invisible scripts about money

There’s an old joke: Two fish are swimming in a pond when an older fish starts swimming the other way towards them. When the older fish passes them, he nods and says, “Good morning! How’s the water?” The two fish swim for a while before one of them looks to the other and asks, “What the hell is water?”

Those poor younger fish have been trapped by Invisible scripts.

Invisible scripts are truths so ubiquitous and deeply embedded in society that we don’t even realise they’re guiding our attitudes and behaviour. Like water to a fish, they surround us even if we don’t know it.

barefoot investor bucket


Everyone has invisible scripts about money

These are the things you have internalised about money – You might not realise you have them.

But they shape the way that you treat your money.

This is a topic that doesn’t get discussed often. Mostly because invisible scripts are revealing. And the things they reveal might be some tough pills to swallow.

But the good news is: they only control you when they are invisible.

Once you bring them to light, you can take back control and make decisions about your money that suit YOUR best interests.

Do any of these invisible scripts resonate with you?


Invisible script #1: “I’m just not good with money”

barefoot investor

This is a really common invisible script, and it’s a problem because it’s so self-defeating. If you don’t think you’re good with money, the game is over before it even begins.

The good news is: No one is born ‘good with money’

It’s a learned skill. And it’s a skill you can learn.

Being good with money has more to do with your behaviour than your brains. You don’t need to be an expert to win at money.

It’s much more important to start than it is to be smart.


Invisible script #2: “I don’t earn enough money to save”

invisible scripts

Having control of your financial future has nothing to do with how much money you earn.

There are people in Australia on multiple six-figure incomes who are completely out of control when it comes to their money. In fact, some of the “richest” looking people are the ones who are struggling the most.

And there are others who have never earned more than minimum wage for their entire lives, but have used smart saving strategies and the power of compound interest to buy their own homes and retire with a multi-million dollar investment portfolio.

It’s not about what you earn, but what you save.


Invisible script #3: “It’s too late for me”

budgeting barefoot

It doesn’t matter how old you are – whether you’re just starting out or you’re approaching retirement, there’s no point beating yourself up about money mistakes you made when you were younger.

The best time to plant a tree is 20 years ago. The second best time to plant a tree is today.

The average life expectancy in Australia is 82 years. How old are you now? Subtract your current age from this number.

Now you have a rough idea of how many years you have left on this planet.

What are you going to do with them? Are you going to continue to stress about money and feel out of control of your own life?

Or will you step up and take action?


Invisible script #4: “The economy sucks”

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I get it – things are pretty tough right now. Our generation has already lived through the GFC – and now the coronavirus pandemic means that we’re going to have a rough time economically for the next few years.

You can’t let that be an excuse. The economy is always going to have its ebbs and flows. But the economy always recovers.

And the reality is – it doesn’t matter what the economy is doing. You’re still going to be better off financially if you follow a smart system of saving – whether in good times or in bad.

More millionaires were created in the Great Depression than at any other time. And the ones who became right back then weren’t the people who gave up because the economy was in the toilet – they were the people who stuck to their guns and did the work.


You can make progress or you can make excuses.

progress for barefoot

There are plenty of other invisible scripts that you might have about your money, and it’s worth spending some time thinking about what your invisible scripts are.

But no matter your situation, no matter what your invisible scripts are, excuses aren’t going to save you when you get hit with a financial emergency.

Excuses aren’t going to change your bank balance.

Excuses aren’t going to set you up for retirement and keep you financially secure through life’s inevitable ups and downs.

The thing that is going to bring control over your money and your life is taking action.

It’s hard to admit that you’re not as financially successful or sorted as you tell yourself are. But once you do, and once you commit to making progress every day, you’re already free.

Financial freedom isn’t about your bank balance, or what house or car you have. It’s a mindset – knowing that you’re taking action to take care of yourself and your loved ones.


What are your top priorities with money?

Money in itself has no value. The value in money comes from the things it helps you achieve.

All the money in the world won’t make you happy. It’s what you do with your money that makes you happy.

robert kyosaki quote

I’m going to share my top 3 priorities with you. Yours might differ from mine, but whatever they are, you should be clear about what having money will do for you.

Here are my top three priorities:

  • ✅  Financial security: I don’t want to stress about money. If the worst case scenario happens, I want to know that I’ve got it covered.
  • ✅  Freedom to travel and spend time with family and friends: For me, life is about the journey. It’s not about a hard, joyless slog through life trying to
    preserve every penny along the way. It’s the experiences and good times you have along the way with friends and family that make life worth living.
  • ✅  Build long term wealth to retire comfortably: We’re all going to get old eventually. And when it comes time to retire, I want to be comfortable. Retirement is supposed to be your golden years – a reward for your hard work over your life. Stressing out about money isn’t part of my retirement plan.

Spend some time thinking about your own money priorities. It will make the hard times easier, and make you so much more likely to succeed.

Now that’s out of the way, let’s dive into the nitty-gritty details. In the rest of this post I will explain the whole Barefoot Investor system for you.


Barefoot Investor Buckets

In this section I’m going to break down the bank accounts and simplify it for you, so you don’t end up like my friend – who gave up.

The Barefoot Investor recommends splitting your income into three separate groups (“buckets”).

  • ✅  Blow Bucket: This is the money you’re going to spend in the short term. The money here is used for daily expenses, the occasional splurge, holidays, and some extra cash to fight financial fires.
  • ✅  Mojo Bucket: The mojo bucket is used for your rainy day emergency savings. It’s safety money for any financial emergencies that crop up.
  • ✅  Grow Bucket: This is your money maker bucket. The grow bucket is where you do your investing and look for longer term wealth building.


barefoot investor buckets

In summary, one bucket is for spending money on life, one is for savings for a rainy day/emergency, and another is for long term investments. 

barefoot investor bank accounts



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Blow Bucket

Now that we’ve moved from our three main categories and demystified the use of funny words.

It’s time to break down what the BLOW bucket means.

This is the one that causes all the confusion, and for my friend just before, the straw that broke the camel’s back.

Your Blow bucket is for expenses and splurge money. This is the only bucket a lot of Aussies have. And it’s one of the reasons why many people find it hard to save.

When you use one account for everything, the money just tends to evaporate. You might have some general ideas about saving and investing, but when it’s all in the one place, the money just tends to disappear.

This is where those funny-named bank accounts come in.

barefoot investor blow bucket

  • ✅  Daily Expenses: For your day-to-day living expenses such as food, housing costs, utilities, fuel.
  • ✅. Splurge: Guilt-free spending money for small things, like a new pair of shoes or a round of beers for your mates.
  • ✅  Smile: More guilt-free spending money. This time for larger purchases that will put a smile on your face, like a holiday, a new couch, or car.
  • ✅  Fire Extinguisher: As the name suggests, this account is for fighting “financial fires”, like paying down debt, saving a deposit, or paying off your mortgage.
    Let’s take a look at each account in more detail.

Under the blow category, the next step is to set up four bank accounts through ING

Let’s take a look at each account in more detail.


Daily Expenses – Your everyday spending you need to live off (60% income)

All of your income should go into your Daily Expenses account. Aside from being the main account you’ll use for your Blow bucket, the Daily Expenses account is like the routing centre for the rest of your accounts.

You’re going to leave 60 per cent of your income in this account for your Daily expenses, and then send the rest of the money to your other accounts.
You should aim to limit your daily expenses to 60 per cent of your take-home pay.

We can break this down further.

You should aim to spend a maximum of 30 per cent on housing (rent or home loan), 510 per cent on utilities, 510 per cent on transport, 5 per cent on insurance, and 510 per cent on food.

living in your limit

This 60 per cent is a guideline – those on lower incomes or higher incomes might have slightly different figures. But in most cases you should be able to keep your daily expenses within this limit.

If not, it might be time to re-evaluate your spending and see what you can cut down on.

barefoot accounts


Splurge – Spending on things you love (10% income)

Now that we’ve covered your daily expenses, it’s time to break down the other 40 per cent of your income. And we’ll start with the fun one – your splurge account.

Set up an automatic transfer of 10 per cent of your take-home pay from your Daily Expenses account into your Splurge account.

Your Splurge account will have its own ATM card. Keep it at the front of your wallet and mark it SPLURGE with a Sharpie.

This is your guilt-free spending money. Go out and blow this money on whatever you want – a new pair of shoes, a round of beers for your mates, whatever you like.

The only rule for this money is: when it’s gone, it’s gone. You can’t cut into your other accounts for your splurge money.

barefoot investor bucket


Smile – long term savings for fun things (10% income)

Another 10 per cent of your take-home pay should be automatically transferred from Daily Expenses to your Smile account (online saver).

This isn’t linked to a bank card.

This account is for bigger goals like holidays, weddings, and other fun things that will cost more than a few weeks’ wages.

This 10% isn’t set in stone – if you are saving up for something bigger like a wedding or a big overseas trip, do the numbers and see how much you will need to put into your Smile account to make it happen.

But if it’s more than 10% of your take-home pay, then you will need to adjust your living expenses accordingly.

barefoot investor smile


Fire extinguisher – debt and financial stress reduction (20% income)

And finally we have the fourth account which is a fire extinguisher. 

Which isn’t linked to a bank card.

You will use your Fire Extinguisher account to put out any financial fires you have, such as credit card debts, saving for a home deposit, paying off your mortgage.

At different stages in your life you will use this for different things, but the 20 per cent should stay the same.

What should you do with it now?

That depends. Do you have any debt (other than a mortgage)? Then allocate the 20 per cent to paying down your debts until they’re gone.

Debt free? Put that money towards saving a deposit for your home.

Already got a home? Use the money to pay off your mortgage.


Setting up your four core Barefoot Investor Bank Accounts

In theory, you could set up these four core bank accounts with any bank. But in the Barefoot Investor, Scott Pape recommends that you set up these accounts with ING.


Because they don’t charge bank fees. You might not think that bank fees are a big deal, but it really adds up. The average Australian pays $489 in bank fees each year. Over the course of your life, that could easily add up to $20,000 or more. That money is better off in your pocket than some shady bank executive’s, so it makes sense to find a bank with no fees.

Which brings us to your new best friend – the ING Orange Everyday debit card. ING has no fees, and will even refund your ATM fees as long as you put in $1,000 per month (usually covered with your salary) and make at least 5 transactions with your card.

You can set up your accounts online, and ING often offers recommendation codes that will give you a bonus for signing up. Jump online, search for “ING referral code”, and put in the code to set up your account.

Otherwise if you don’t have a referral code you can simply go online and set up an account following the prompts here.

You will need to set up four accounts. Two of your accounts will be Everyday bank accounts. Call one “Daily expenses” and the other “Splurge”.

The other two bank accounts will be Online Saver accounts. Call those “Smile” and “Fire Extinguisher”.

Barefoot Investor Bank Accounts Explained


Setting up your automated saving system

Once your bank accounts are all set up, the next step is to set up your automated payments.

First, contact your employer and tell them to put 100% of your take-home pay into your “Daily Expenses” account. Do it in writing.

Once that’s done, the rest is fairly straightforward.

Set up a recurring transfer from your Daily Expenses account into your other accounts every pay cycle. Here’s how to do it:

  • ✅  Splurge: 10% of your take-home pay.
  • ✅  Smile: 10% of your take-home pay.
  • ✅  Fire Extinguisher: 20% of your take-home pay.

Once that’s done, you’ve set up the most important part of the Barefoot Investor system.

You now have one account for your daily expenses, another account for guilt-free short term spending, one for larger purchases that make you happy, and finally another account for fixing your financial fires.


Mojo Bucket

So now that you’ve got your core accounts set up, it’s time to step away and open a separate account. This one is called Mojo.

This is your emergency money. You only use it for real emergencies like losing your job or getting sick. And no, a really good deal on holiday getaway is not an emergency.

Having this money on hand for emergencies will change the way you think about money. Once you know you’re covered in case of an emergency, a great weight will be lifted from your back.

barefoot investor mojo account

Mojo is recommended to be with a different bank.

When it comes to Mojo, you need to start off by gathering as much money as you can to save at least $2,000 to get you kickstarted into gear.

Whether it’s selling clothes, old iPhones or whatever you can find. It’s about gathering the money to get your Mojo account up and running.

You should set up this account at a completely different financial institution to your other accounts. The reason being that you want to make it hard to get the money, and put it out of sight. That way you won’t be tempted to dip into this money unless you really need it.

For this account, you can choose any online bank that has no fees. Scott Pape recommends UBank USaver, but you can stick with an existing account as long as they don’t charge you any fees.

Once you have the initial $2,000 in this bucket, you won’t be adding to this account in the short term. It will come back into play once you’ve paid off your debts, saved a deposit, and bought a home.

After you’ve done all that, you will use your Fire Extinguisher money to build up a minimum of three months living expenses. Read the book for more details about this part of your financial journey.

barefoot investor mojo accounts

From this day forward, the Mojo account is going to act like your credit card.

barefoot investor fire extinguisher

After that, then you’ve got your Mojo building which then the money begins to move into your Mojo that then starts to become your grow bucket.


Grow Bucket

The third and final bucket is for building long term wealth.

The aim of this bucket is to get a little wealthier every day.

Thanks to the wonders of compound growth, every dollar you put into this bucket should double every 7 to 10 years or so. That might not sound like much, but over the course of your life it can make you incredibly wealthy.

barefoot investor grow

This bucket includes your super fund and any other investments you own. For now, it might just be your super and that’s fine.

Your Grow bucket is outside the scope of this post – we’re focusing here on setting up your accounts. But it’s still a good way to think about your money.

In the Barefoot Investor system, the Grow bucket comes into play once you’ve bought your family home. Once you’ve done that, you will increase your super contribution to 15 per cent total.

And once your family home is paid off, you can use your Fire Extinguisher money to start investing.

You can invest this money however you like.

Whether it’s keep it as savings, as shares, property or cryptocurrency.

barefoot investing

It’s up to you how you build your wealth.

barefoot investor grow bucket



An example of how the Barefoot Investor accounts work

All of your income goes into the BLOW bucket. 

  • ✅  60% goes into Daily expenses
  • ✅  10% Splurge
  • ✅  10% Smile
  • ✅. 20% fire extinguisher

Then from Fire Extinguisher you pay off debt.

You will use your Daily Expenses account to keep the lights on, the car running, and food in your belly.

Your Splurge account goes towards guilt free spending on whatever you want – a nice dinner with the wife, or a new X Box. Spend it on whatever you want – but when it’s gone, it’s gone.

You use the Smile account to cover larger expenses like holidays, weddings, and big purchases.

And finally, the Fire Extinguisher account is used to fight your financial fires. It starts with paying off all of your debt.

Next you use it to save a deposit and buy a home. Then, you use it to pay off your home as quickly as possible. Once you’ve done all that, you will use your Fire Extinguisher for building wealth in your Grow bucket.

It’s a simple system, but that’s why it’s good. It’s flexible enough that you can use it throughout your life, and no matter how much (or how little) you make. But it still enforces good savings habits and will put you on the path to long term wealth.


How to set up the Barefoot Investor accounts?

ING gives out recommendation codes to get $75 when you sign up.

Jump online and put in the code and you’ll be able to set up your account. Otherwise if you don’t have a referral code you can simply go online and set up and account following the prompts here.

Once you’ve set up your bank account, then your two cards will be mailed out to you.

As it’s an online bank, it’s really easy to do from the comfort of your own home. 

They have good customer service if you call them too.

Now it’s time to hear from you

Have you tried the Barefoot Investor system? Did you like it, or was it too complicated and you gave up? Did this post help you to understand how it works and provide you some more clarity?

Let me know your thoughts.

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