The Three Buckets of Life: How to Spend Your Time and Money

You want to live the happiest life you possibly can. I do too.

But how do we do that? Most things, like where we were born or who our parents are, aren’t under our control, but we can focus on the things that we can control, like making better decisions. That’s easier said than done, since the future is uncertain and it’s hard to know what the best move is in any given situation.

And how do we determine what “the best possible life” even is? What should we be aiming for?

I spend a lot of time thinking about these kinds of questions. I’ve read countless books and blog posts, watched YouTube videos, and listened to podcasts, and I’ve developed a model I think is useful. Everything we spend time and money on falls into three buckets. When I finally understood the three buckets, the fog around making decisions melted away. Suddenly questions like this were much easier to answer:

• Should I take that singing course or learn Spanish?
• Should I save my tax return or splurge on a new TV?
• What kind of future is best?

What are these three buckets and how exactly will they help me? Keep reading and find out!

The Three Buckets Model: How to Make Better Decisions about your Time and Money

I’d been reading a bunch of personal finance advice and noticed that a lot of it advocated for similar things:

“Cut out unnecessary expenses, save money whenever possible, never go into debt, obsess over your monthly cash flow, and you’ll eventually be rich! It’s hard but it only takes discipline. But don’t worry, it’ll all be worth it — you’ll feel so superior when you get to retire earlier than the guy next to you!”

Something about this analysis never sat right with me. Imagine if you applied this same mindset to food.

“Cut out unnecessary calories, go to the gym whenever possible, never eat ice cream, obsess over calories burned versus calories eaten, and you’ll eventually be thin! It’s hard but it only takes discipline. But don’t worry, it’ll all be worth it — you’ll feel so superior when you are more attractive than the guy next to you!”

If you thought about food this way, you would probably have an eating disorder. You would be losing out on all the joys of food — tastes, sharing meals, trying new things — never thinking about it as anything more than calories to be minimized. You would be impaired from hunger and malnutrition, not to mention causing permanent damage to your body. (If you do think about food this way, please get help! I think it’s really helpful to learn about intrusive thoughts and OCD and how we all have these to some degree. I don’t know if I “endorse” this post but it’s a good starting point to thinking about intrusive thoughts and food/body stuff: https://tabithafarrar.com/2017/04/anorexia/)

But if you apply the same obsessive framework to money, suddenly we as a society think that’s a good thing. You’re wise, you’re disciplined, you’re “good with money”.

America does have an obesity problem¹ and a credit card debt problem. One could argue that more people should be concerned about calories and/or debt, but I think this is a case of the pendulum effect, where society reacts to a problem with a completely overboard solution that causes harm on the same order of magnitude as the original problem.

Just like an eating disorder makes you only think of food in terms of calories and weight, typical personal finance makes you only think of money in terms of dollars. How many dollars are coming in, how many dollars are going out? I call this “financial anorexia”.

“But John!” you say. “The system works! I am richer than the other guy from all of my constant coupon-clipping, stock-buying, and following deontological rules about never going into debt, never making luxury purchases, and never renting instead of buying!”

I think the problem with these frameworks is that they have no higher purpose. The only goal is “be rich” or “be skinny”, and you try to achieve that goal by any means necessary, even if those means are harmful or not even contributing to the goal.

So what is the purpose of money? You would think that would be obvious, but a lot of the discussion around money seems to be clouded in confusion about what it’s for. People spend money on so many different things:

• Food
• Clothes
• Rent
• Mortgage
• Utilities
• Car payments
• Gas
• Airplane tickets
• Insurance
• Vacation
• Savings
• Tickets for concerts, museums, movies, etc.
• Education

As I thought of more things, it seemed that anything you spend money on can be placed into three main categories, or “buckets”. Money is for either:

1. Enjoyment
2. Increasing future enjoyment
3. Protecting future enjoyment

Let’s say you have $10,000. You could spend it on:

Bucket 1: Enjoyment

• A nice vacation to Tokyo
• A donation to a charity
• A schweet entertainment system to watch movies in 4K and play video games
• A new instrument
• A nice gift for your mom
• The Penguin Classics Library Complete Collection (Just kidding. Better find it on sale.)

These are things from which you directly derive pleasure, enjoyment, and/or utility.

Bucket 2: Increasing future enjoyment

• Investing in the stock market, Bitcoin, gold, or (if you’re an empiricist) Vanguard mutual funds
• A sales course to try to increase the sales you make and in turn, your income
• Starting a business or “side hustle”
• Therapy to make me deal with stress and anxiety better and in turn be more productive and happy
• Better software: Notion, Evernote Premium, Photoshop, etc.

All of these things are investments in a sense: they increase future money.

Bucket 3: Protecting future enjoyment

• Stockpiling emergency supplies
• An emergency cash fund
• Signing up for cryonics
• Earthquake safety improvements for your house, if you live in earthquake country
• Brazilian jiu-jitsu or Muay Thai classes, to decrease the risk of being seriously injured in a fight

All of these reduce the risk of losing out on future enjoyment (whether it’s by death, injury, or losing resources).

Bucket 2 and Bucket 3 eventually plug into Bucket 1. Either I’m trying to ensure I can keep on experiencing enjoyment or I’m trying to increase the amount of enjoyment I have in the future.

For those who are thinking, “Hey, John! Life isn’t only about hedonism, okay? We need real meaning and fulfillment in life!” I would say this is a matter of semantics. If you are doing things that give you “meaning” or “fulfillment”, those are still part of Bucket 1, whether that’s eating ice cream or having a partner who loves you.

Sometimes, a purchase can fall into more than one bucket.

• Buying a house can give you direct utility from shelter, comfort, social status, etc. (Bucket 1). If you bought it in a good area that is likely to increase in value, it is also an investment (Bucket 2).
• An ergonomic work setup like a standing desk and a good office chair increases my productivity (Bucket 2) and may decrease future health problems (Bucket 3).
• If you take a very practical martial arts class, you can reduce the risk of being injured in a fight (Bucket 3). But if you also enjoy doing it, it gives you direct utility as well (Bucket 1).²

But the point isn’t to get into a legalistic discussion of what belongs in which bucket. The point is to use this framework as a tool for decision-making.

Let’s say your daughter has just turned 16 (the legal driving age in the US) and you want to get her a nice present. You have some choices:

• An elaborate European vacation (Bucket 1)
• A summer boot camp on programming (Bucket 2)
• The safest car on the market (Bucket 3)

There are good reasons to do each of these.

• International trips are enriching. She can get some life experience getting to know other cultures and brag to her friends about it.
• She’s not sure what she wants to do career-wise but you know programming is a great profession and she’s open to testing her aptitude at it. This could help her make the decision about what to major in in college.
• You know that car crashes are the leading cause of death among teens in the US. Getting her one of the safest cars and taking a safety course would greatly reduce her risk of injury or death in a car accident (assuming that having her own car doesn’t increase her base rate of getting into cars with teenage drivers in the first place).

You could also decide to split it up. Instead of seeing Europe, she could go to Southeast Asia. Instead of doing a whole boot camp, she could do a course on Udemy. And the Insurance Institute for Highway Safety puts out a list of pretty safe cars that won’t require your entire life savings: https://www.iihs.org/ratings/safe-vehicles-for-teens.

So how do you decide? Is it better to drop it into one bucket or split it up? That depends on the weights you put on your values. She’s quite young and has so much of her life left so Buckets 2 and 3 should have more weight to them. I personally would consider getting a very safe car and forgoing everything else because of how high a risk car accidents represent.³

The younger you are, the more resources you should devote to Buckets 2 and 3, because you have longer to reap the benefits. Conversely, the older you are, the more resources you should put into Bucket 1. Say you’re 80 years old and currently have $100,000 in savings, and you have no heirs. You’re probably going to want to put that money into Bucket 1 (or sign up for cryonics). This is part of the reason old people go on so many vacations.

If you take this a step further, you can apply this same framework to how you spend your time. Everything we do is for either:

1. Enjoyment
2. Increasing future enjoyment
3. Reducing future risk

Let’s say you have six weeks to spend however you want. You could spend your time on:

Bucket 1: Enjoyment

• Reading War and Peace
• Binge-watching The Sopranos
• Bonding with your friends
• Going to a different brewery every night
• Going on a road trip

Bucket 2: Increasing future enjoyment

• Studying for a test
• Practicing Spanish
• Doing some journaling and working out some of your issues
• Work. This is probably how you spend most of your non-sleep time. Why? Because if you don’t, you’re not going to be enjoying life starving.

Bucket 3: Protecting future enjoyment

• Taking CERT classes
• Installing anti-slip mats and other safety equipment you ordered but were too lazy to set up
• Backing up your files

Once you start thinking about your time this way, it becomes much clearer how you are spending your time and where you should adjust to spend it better. Maybe you spend too much time working and not enough time reaping the benefits of that work (too much Bucket 2 versus Bucket 1). Or maybe you’ve rebelled against seriously investing yourself in work because you thought you were “working just to die” (too much Bucket 1 versus Bucket 2), but now you realize that even if you want better Bucket 1 activities, you should invest in Bucket 2. Or maybe you’ve poured a lot of time and money into preparing for an apocalypse, but realize you’re at a much higher risk of dying in a car accident (shifting around Bucket 3 priorities).

The important thing about Bucket 1 versus Bucket 2 activities is that Bucket 1 activities tend to give you only what you put into them, while Bucket 2 activities can often multiply over time. So if you spent $10,000 and 12 weeks on a coding boot camp, but at the end of it you got a $50,000 increase in salary that compounded for the rest of your life, you get way more out of that than if you spent the same 12 weeks going to bars with your friends.

It doesn’t make sense to put all your resources into Bucket 1. You might have a great time spending all your money on entertainment systems, fine dining, and vacations, but you will be missing out on a lot of future utility, not to mention the higher likelihood of death or injury or huge medical bills from not investing anything into risk reduction.

This insight explains some of our societal bias against people who “waste time” playing video games or watching Netflix. A lot of Bucket 1 activities can be somewhat addictive (since by being in Bucket 1, they are giving you enjoyment or some utility), so it leads people to spend time in Bucket 1 that they should be spending in Bucket 2.

(Another more questionable criticism is that playing video games and watching Netflix isn’t “fulfilling”. I would say that depends. Is it better to read a book than watch a movie? I think they are both art to be experienced.)

At the same time, it doesn’t make sense to only put resources into Bucket 2 or Bucket 3. (And you literally can’t do that because you would die of starvation, but say you were living off the bare minimum food- and shelter-wise.) Buckets 2 and 3 are totally meaningless unless they eventually feed back into Bucket 1. Money has no inherent value. It is a means to an end, not an end in itself.

Say you only put your money into Bucket 2. That means you would just be investing your money all the time but never spending it or gaining any sort of utility from it. So you invest your money in the stock market. Then you grow your money 10x — congratulations! But what do you do with it? Say you made a brilliant move and grew your money 1000x. What now? You can’t spend it because you’re only putting it into Bucket 2. You can’t even tell anyone about it because the respect and admiration of your peers falls into Bucket 1. It might be fun to play around with the stock market, but you’re not owning stocks for the sake of owning stocks.

This is why it’s important to discover your terminal values:

A terminal value (also known as an intrinsic value) is an ultimate goal, an end-in-itself.

Terminal values stand in contrast to instrumental values (also known as extrinsic values), which are means-to-an-end, mere tools in achieving terminal values. For example, if a given university student studies merely as a professional qualification, his terminal value is getting a job, while getting good grades is an instrument to that end. If a (simple) chess program tries to maximize piece value three turns into the future, that is an instrumental value to its implicit terminal value of winning the game.⁴

Instrumental values are a means to an end. Terminal values are the end.

Let’s say you’re in high school and you want to go on a nice backpacking trip before you start college. You’ve planned out everything and come up with a budget. You’ll need $3000 for the trip. Time to get a job! You see a “Help Wanted” sign for servers at the local artisanal pizza place. So you get hired but you need to get ServSafe certified.

In this example, let’s break down what is an instrumental value and what is a terminal value:

• The ServSafe certification is an instrumental value
• The job is an instrumental value
• The money is an instrumental value
• The vacation is a terminal value

The astute and detail-oriented will note that the trip may not be a truly terminal value. What is the most terminal value then? Identifying our most terminal values is a bit trickier. Maybe it’s the feeling you get walking around in a new place or meeting new people or biting into a food you’ve never tried before. We could further reduce that down into “exploration” and “novelty” being a terminal value. When we have a more complete model of qualia we could have better terms for it. Maybe “positive qualia” is our real terminal value.

We may not be able to easily figure out our final terminal values. But roughly figuring out our more terminal values can help us make better decisions.

For example, say I want to make an elaborate meal for my friends. I choose the coq au vin recipe from The 4-Hour Chef. I picked that one because it’s a fancy seeming meal I can make to show off to my friends and look like a good cook. But what if my friends just read Peter Singer and became vegan? Well, my terminal values here might have been to feel loved and respected and competent. Once I know that that’s my goal, I can see if there’s a better way to achieve it than cooking coq au vin.

Or, let’s say I had a dream to become an actor. Then I spent some time thinking about it and realized that the only reason I wanted to become an actor was to feel recognition. I realize that there are lots of other ways to get recognition and the other ways are easier and fulfill other terminal values of mine. Maybe I like economics and I’m a good programmer. I could build something a lot of people want to use and get recognition and money that way, so trying to do a startup might be a better fit for me than being an actor.

Here are some tools for finding your terminal values: https://programs.clearerthinking.org/intrinsic_values_graphic/graphic.html

Determining our terminal values can be quite complicated.⁵ But we don’t need to have a perfectly worked out theory in order to make progress. There is plenty of low-hanging fruit:

• Would you rather be in good shape or poor shape?
• Would you rather have more money or less money?
• Would you rather have a good circle of friends or a toxic one (or none at all)?

We don’t need to have worked everything out to know that us and our loved ones being alive and healthy is better than not.

Now that we have the framework in place for evaluating how to spend our time and money, this brings us to the question: “What should my current goal be?”

If our ultimate goal is to enjoy our existence as much as possible — whether that means by exploring as much of the world as possible, having as much sex as possible, or seeing your children and grandchildren grow up and thrive — than the base requirement for that is that we are alive to do it. Dying is terrible. It isn’t the worst thing in the world because it at least means there is no more suffering. But there is also no more enjoyment. So if your life was a net positive, you should want to not die, or at least be able to choose when you die.

My mission is to maximize long-term utility for me and my loved ones. Because of this, my number one ultimate goal is to do what I can to get humanity the ability to achieve longevity escape velocity.

Longevity escape what? Longevity escape velocity or LEV is where: “life expectancy is extended longer than the time that is passing. For example, in a given year in which longevity escape velocity would be maintained, technological advances would increase life expectancy more than the year that just went by.”⁶

“Yeah, sure, John,” you say. “That’s some sci-fi shit.”

Yes, just like submarines and going to the moon.

“But John!” you say, “I don’t think it’s natural to live more than 78.69 years: the average life expectancy in the United States in 2016!”

I bet someone born in the Victorian Era thought living to the age of 45 was “natural” too. Back in the day, people used to regularly die under the age of 5. Smallpox existed, childbirth was dangerous, and an allergic reaction meant certain death. Now those things aren’t even in our minds. We’re going to look back on the time before we developed rejuvenation technology the same way we look at the plague: a tragic time when people had to suffer and die. We’re going to have eternal gratitude that we live now and not in 2000. It will be considered a huge tragedy if someone dies at the age of 100, or dies at all.

New technologies, trends and developments can often feel weird. I’m sure CPR was weird when it first came out. Or blood transfusions. “You’re taking blood out of someone else’s body and sticking it in me?” Or organ donations. How is that not weird??? But when your kid needs a kidney, you’re not turning it away when their name finally comes up on the list. You’re ecstatic! You’re hoping and praying it takes and they live! The technology that needs to be developed is no different from that.

Even if you don’t want to live forever, if we have rejuvenation technology, you have the option to live as long as you want to.

Being alive is a basic requirement of experiencing enjoyment. Lack of rejuvenation technology is the current biggest hurdle to ensuring future enjoyment. Therefore this is my highest priority.

I love this quote from Nate Soares:

So I’m really not recommending that you try this mindhack. But if you already have spikes of guilt after bouts of escapism, or if you house an arrogant disdain for wasting your time on TV shows, here are a few mantras you can latch on to to help yourself develop a solid hatred of fun (I warn you that these are calibrated for a 14 year old mind and may be somewhat stale):

When skiing, partying, or generally having a good time, try remembering that this is exactly the type of thing people should have an opportunity to do after we stop everyone from dying.

When doing something transient like watching TV or playing video games, reflect upon how it’s not building any skills that are going to make the world a better place, nor really having a lasting impact on the world.

Notice that if the world is to be saved then it really does need to be you who saves it, because everybody else is busy skiing, partying, reading fantasy, or dying in third world countries.

It also helps if you’re extraordinarily arrogant and you house a deep-seated belief in civilizational inadequacy.⁷

The second article in this series covers more on why I’m against aging:

https://www.johncgreer.com/fighting-aging/

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1. I know some of my readers might think this could be “fatphobic” or not “body-positive”. When I say “obesity problem”, I’m referring to the people for whom obesity isn’t ideal for their happiness no matter if society glorifies all body types or not. [↩]
2. As far as choosing your hobbies, all things being equal, you might as well do the thing that gives you more benefits. For example, if I enjoy gardening as much as Brazilian jiu-jitsu, why not do the one that teaches me how to fight and get in some exercise? [↩]
3. Why not max out her chances of living? Protect her at any cost. Make her live in a bubble. There’s a surprisingly deep scene in Home Alone 2: Lost in New York.

   Kevin: I had a nice pair of rollerblades. I was afraid to wreck them, so I kept them in a box. Do you know what happened? I outgrew them. I never wore them outside. Only in my room a few times.

   If you keep your daughter in a bubble to keep her from dying, then you’d have to think about what the point of her being alive in the first place is. (I’m not saying it’d never be worth it to sacrifice enjoyment for longevity. If you knew that immortality technology would come in ten years, then there is an argument to greatly sacrifice enjoyment because the expected value is so high.) [↩]

4. https://wiki.lesswrong.com/wiki/Terminal_value [↩]
5. This is one of the very hard problems in developing a safe artificial intelligence:

   The utility function may not be perfectly aligned with the values of the human race, which are (at best) very difficult to pin down. [↩]

6. https://en.wikipedia.org/wiki/Longevity_escape_velocity [↩]
7. http://mindingourway.com/habitual-productivity/ [↩]