The 3-Bucket Approach to Building Wealth

3-Bucket Income

At the age of 25, I stumbled across a book by Malcolm Gladwell called “The Tipping Point,” which detailed how the creation of a product could snowball into a movement. While it was a compelling moment—and I had no doubt anyone could be wildly successful if they put in the effort—I wasn’t sure how to go about finding the breakthrough. And I’m not alone: Turns out the overall household debt in the United States jumped by 11% in the last 10 years.

But it can be reversed.

I started my journey slowly with the intention of taking small, actionable microshifts toward business freedom. In order to get by, I needed a foundation of income to stand on. To find new sources of income, I explored new opportunities and invested further in my education and creative talents. Throughout it all, I kept my eyes on the prize: freedom to work for myself and do what I loved.

I didn’t successfully replace my foundational income with money earned by owning my own business until I was 37. I never found the breakthrough I was looking for, and it turns out that was the breakthrough. Small steps compounded over time are how you achieve any goal. By incorporating “income buckets” into my strategy, I could enjoy the security of regular income while exploring new revenue streams with the possibility of someday working for myself.

Here’s how these buckets work:

Bucket One: The Foundation

Everyone has bills to pay, and most people have more than they bargained for. Without a foundation of income to keep your head above water, you’re living in scarcity and fear of the unknown. This is not the right place to find creative energy. Whether or not you like it, hang on to your day job. Learn as much as you can in whatever position you’re in—observe customer behaviors, learn about customer pain points, ask your supervisors questions, and participate even when you feel like giving up. Bucket One isn’t by definition miserable, but regardless of whether or not you like what you’re doing, you can always count on it for income.

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Bucket Two: New Revenue

My personal favorite: Because your foundation is taken care of, you can use your curiosity, creativity, and unique talents to explore new opportunities. What hobbies do you love that others have turned into businesses? What’s lacking in the marketplace that you could create? What would you enjoy doing as a side hustle? The New Revenue Bucket is fun because you don’t have the pressure of paying the bills. Instead, you’re just tapping into different possibilities to see what has the most potential.

And the “new revenue” concept is quite a familiar (and effective) one: A recent survey found that 44 million Americans find a way to make money outside of their main source of income. 25% earn $500 or more in a month by doing it.

Exploring new opportunities will end up costing money at some point in the form of supplies, equipment, or education. If you don’t have additional resources to work with, focus on your active jobs to save up some money to invest in Bucket Two. There are two ways to come up with additional money: saving more means living frugally and trying to reduce your expenses as much as possible. Earning more means starting a side hustle or working overtime—whatever it takes to increase your income stream. The best way to find yourself with more money is to do both.

Bucket Three: Heart Project

If time and money were no object, what would you be doing? You’ll want to receive income for it, but the true goal is loving what you do. Maybe you’d start a wellness retreat in Costa Rica or a blog where people follow your travels around the world. This bucket is where we’re truly in touch with our soul and our authentic self. Once you’re making income from this bucket, there’s no stopping you.

And doing what you love, according to Huff Post, “fosters your well-being by doing something that lights you up.” If for no other reason, pursue your heart project for a little positive self-exploration.

Turning Bucket Three into Bucket Two (or even One) will never be an overnight process. It can take years of hard work and dedication, but the following tips will help ensure your dreams eventually become a reality:

1. Show up and take action. Just like the Wayne Gretzky says, “You miss 100% of the shots you don’t take.” Staying stuck or stagnant is a choice. Choose fresh ideas and opportunities by participating whenever you can.

2. Stay curious. Don’t ignore your doubts, but always question them. Challenge yourself to look at opportunities in a new way.

3. Challenge the naysayers. If it’s never been done, plenty of people will step in to remind you it’s impossible. It’s not. If someone wants to put you in a box, stand on it instead and keep following your dreams.

4. Don’t give up. At some point, you’ll want to; I guarantee it. You’ll feel your ideas are too hard to put into practice and they’ll never work. The remedy for those feelings is taking action.

5. Don’t limit yourself. You can have many buckets. Load up on them—they won’t all work, but some will, and they can be moved around as revenue emerges and systems are proven.

Following your dreams is difficult. If it were easy, everyone would be doing it. Instead, most people spend a huge portion of their lives working in jobs they don’t like for causes they don’t believe in. But by using the bucket system to categorize your income, you can maintain the level of income security necessary to explore creativity that fosters a lifetime of income, growth, and personal fulfillment.

KEEP READING: Knowing Why You Spend Your Money Can Heal You

Kass Rose

Kass Rose is a real estate entrepreneur and founder of three companies, including Rent My Way, a leasing automation platform for renters in the property management industry. Over her 24-year career in both the real estate and auto industries, Kass financed, distributed, or sold more than $385 million worth of assets and currently manages rental properties worth more than $83 million. Kass has been featured in Inc., Entrepreneur, and other outlets. She is a music-loving yoga instructor, world traveler, sky diver, mother to two sons, and newly minted author of the book, "Care Your Way to Clarity."