How we work with barefoot investors

Ben Brett 10 May 2019

With the explosion in popularity of the book “The Barefoot Investor” by Scott Pape, we are seeing a number of people coming to us that have read the book, started the process and are now looking for financial advice that compliments it.

For those of you who haven’t read the book, I would recommend you check it out. It’s a great read and has some really great budgeting tips. Basically, the premise works around setting up different bank accounts for different purposes. It’s financial planning 101 and it’s something I have personally done for a long time (although in a slightly different way). Scott recommends apportioning a percentage of your income to each account as follows:

Blow– 60%

This is for every day expenses such as rent or home loan repayments, food, insurances and utilities.

Splurge (Short-Term)- 10%

This is for spending on things that you enjoy, like clothes or your social life.

Smile (Long-Term)- 10%

The smile account is for fun longer term goals, such as a wedding or a holiday.

The Fire Extinguisher Bucket- 20%

This is for big savings goals but less fun things, like a house deposit or paying off your mortgage faster.

This is a great starting point but doesn’t take into account your individual circumstances. For example, living costs for a couple renting in Sydney are going to be substantially different to a couple who already own their own home in a rural town. For this reason, we find that many people who have set up the accounts find they are either lacking in one account or they have substantial savings in another. This can remove the value of the separate accounts as you quickly find yourself dipping into one account to pay the shortfall in others. This is where we find good financial advice can really assist.

With our clients who have established these accounts, we work out their expenses on a yearly basis. We then break that down into pay cycles and indicate how much needs to go into each account. We find by doing this, that our clients are more likely to only use the accounts for their intended purpose which helps them achieve their goals.

Further, we monitor their spending and adjust on an as needs basis using our MyProsperity app. This helps our clients understand where they are meeting their budget and where they are overspending. This allows us to have a conversation about whether they want to reduce the spending or alternatively, simply assign more to that account.

Whilst having set figures is a good starting point, it doesn’t take into account what people want out of their life. Whilst some people are happy to forego everything today to save for tomorrow, others are happy to live a good lifestyle now, even if it means they don’t save as much. By having a better understanding of where your money is going, you can make the decision about how much you want to give up now to save for your longer term goals.


In the book, Scott recommends finding the lowest cost super fund and consolidating all of your super into it. Whilst everyone loves a bargain, the normal rule in life that ‘you get what you pay for’ still applies.

For some people, consolidating your superannuation can be disastrous. Not all super accounts are made equal and many people have older style accounts which provide amazing benefits. If they consolidate their super, they lose these benefits. Another issue that can arise relates to your life insurance. For some people, the insurance they have in their super is the only insurance they will be able to get. If they roll out of their fund, they lose this insurance and are on their own if something happens to them.

In our experience, our clients appreciate outsourcing this part of their financial plan. This isn’t to say Scott’s advice is bad, there are far too many funds out there that are charging far too much. Sometimes though, it’s appreciated to have an expert looking over your super from time to time.


The book doesn’t really address your life insurance held in your super. Where it does, it recommends that you talk to your super fund about insurance. Whilst having insurance is a good start, having the right insurance is the goal. It’s easy to say ‘I’ll read the terms and conditions’, but can you? In my old job as a lawyer, I once wrote an insurance policy that went over 100 pages. That’s right, I sat down one day and wrote a 100 page document.

Our clients appreciate that when it comes to insurance, we know what works and what doesn’t. By outsourcing your life insurance, you can be confident should you ever need to claim.


A few clients have been using the Barefoot Investor strategy for a few years and have managed to save a good chunk of money. They are wondering how to invest it and that’s where we can help. We wouldn’t recommend going and buying individual shares of companies. Instead we can review and recommend an appropriately diversified investment strategy.

We love the Barefoot Investor because it starts the process of thinking about your financial plan. It helps develop habits which, when applied over a long period of time, can benefit you significantly. The power of financial advice is magnified when added to disciplined saving strategies.

If you’re a Barefoot Investor and interested in knowing how financial advice fits in with it, please feel free to reach out.

A very young Barefoot and myself circa 2008 on a night out in LA. Please excuse the terrible backpacker’s haircut! (or lack of it)

This post is from our resident Financial Planner Ben Brett, check out his details in the About Us section.

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About the author: Ben Brett

Ben Brett owns and operates Bounce Financial with his wife, Cara. Having started his career as a Corporate Lawyer, Ben has always had a passion for helping make the complex things simple. Follow Ben on LinkedIn at