Barefoot Investor's Emergency Fund Strategy

Barefoot Investor’s Emergency Fund Strategy

Last Updated on 27 January 2024 by Ryan Oldnall

Scott Pape, popularly known as The Barefoot Investor, has devised an Emergency Fund Strategy, which stands as a fundamental element of his financial philosophy. This strategy offers a clear and practical approach to ready oneself for unexpected financial challenges.

The strategy centers on the “Mojo” account, an integral part of a three-bucket system. This article delves into the essential principles and practical tips of Barefoot Investor’s approach, guiding you to create and maintain a robust emergency fund for long-term financial stability.

Understanding Barefoot Investors Philosophy

The Barefoot Investors financial philosophy centers on simplicity, epitomized by his three-bucket system: “Blow,” “Grow,” and “Mojo” accounts.

The “Blow” bucket covers daily expenses, the “Grow” bucket addresses long-term investments, and the “Mojo” bucket serves as a dedicated emergency fund.

The Mojo Account: A Financial Safety Net

At the heart of the Barefoot Investor’s financial philosophy lies a practical approach to navigate unforeseen financial challenges, the Mojo account.

Described as a dedicated safety net within the Barefoot Investor’s renowned three-bucket system, the Mojo account isn’t just another account; it’s a strategic financial cushion designed to be available for unexpected events.

This account, distinct from the everyday spending in the “Blow” bucket and the long-term investments in the “Grow” bucket, remains untouched until life takes an unexpected turn, making it an important element in building financial resilience.

Understanding the Three-Bucket System

To appreciate the significance of the Mojo account, one must grasp the dynamics of the entire three-bucket system. Each bucket serves a specific purpose, contributing to a comprehensive financial strategy.

The “Blow” bucket addresses daily expenses, the “Grow” bucket focuses on building long-term wealth, and the “Mojo” bucket serves as a safeguard during times of financial strain.

BLOW – Everyday Expenses:

This is where your entire income, 100%, is allocated. It handles your day-to-day necessities such as rent, groceries, bills, debt payments, and also sets aside funds for larger expenses like holidays or special purchases.

MOJO – Emergency Savings Fund:

Consider this as your financial safety reserve. Its purpose is to stop you from accumulating more debt or resorting to a credit card during unforeseen circumstances. Money flows into Mojo from your everyday fund (Blow) and gradually spills over into the Grow bucket.

GROW – Long-Term Investment:

This is the destination for building your long-term wealth and augmenting your net worth. The funds for this bucket come from the overflow of Mojo, creating a pathway to sustained financial growth.

Establishing Your Mojo Account

The Barefoot Investor’s approach places practicality at the forefront. Setting up a Mojo account involves intentionally selecting a separate financial institution from everyday transactions.

This intentional separation serves not only a logistical purpose but also introduces a psychological barrier, reinforcing that the funds in the Mojo account are exclusively reserved for emergencies.

Barefoot Investor's Emergency Fund Strategy

Sizing Your Emergency Fund: The Three to Six Months Rule:

Determining the appropriate size for your Mojo account is a crucial step in Barefoot Investors’ strategy. He recommends accumulating at least three to six months’ worth of living expenses within this account.

This method finds a balance, ensuring solid financial protection with realistic goals for an effective and sustainable safety net. If the approach is too unrealistic, long-term sustainability becomes difficult.

Automation and Consistency

Consistency is the heartbeat of financial success in Barefoot’s philosophy. Automating contributions to your Mojo account is a key element.

This not only fosters a disciplined savings habit but also ensures a steady and reliable growth of your emergency fund over time, reinforcing the notion of ‘set and forget’.

Regularly Review and Adjust

Life changes, and so does your financial situation. According to the Barefoot Investor, it’s crucial to routinely assess your emergency fund to make sure it matches your current circumstances.

Events like job changes, marriages, or the arrival of a new family member might require you to adjust the size and structure of your Mojo account. Stay flexible to maintain financial resilience.

Replenish Promptly After Withdrawals

Should you find yourself tapping into your Mojo account due to an unexpected expense, the Barefoot Investor stresses the importance of prompt replenishment.

Swiftly restoring the funds ensures that your emergency fund is always ready for the next unexpected challenge. This proactive approach maintains the effectiveness of your financial safety net.

Consider Additional Safety Nets

While the Mojo account is a potent financial tool, the Barefoot Investor acknowledges that life’s emergencies can sometimes surpass its scope. To complement your emergency fund, consider exploring insurance policies that provide coverage for specific risks.

Income protection or health insurance can offer an additional layer of financial security, fortifying your overall resilience. Most people tend to have this covered within their superannuation fund as it is very simple to setup and maintain coverage.

Educate Your Family

Financial emergencies affect everyone in the household. The Barefoot Investor emphasizes the need for clear communication within your family about the Mojo account.

Ensuring that everyone comprehends the purpose and function of the emergency fund fosters a shared commitment to preserving and utilizing it when necessary.

Celebrate Financial Milestones

Establishing and sustaining an emergency fund is a noteworthy financial accomplishment. The Barefoot Investor suggests celebrating milestones, like reaching a specific savings target. Recognizing these achievements not only boosts morale but also reinforces a positive connection with financial goals, encouraging ongoing commitment.

Offset Accounts And Other Strategies

For those who prefer not to have a separate bank for their mojo fund, consider placing your emergency fund in an offset account is a prudent option.

This account would offset against your household mortgage, effectively reducing the interest payable on your mortgage while still maintaining the liquidity of your emergency fund.


Implementing and managing the Barefoot Investor’s emergency fund strategy is about more than just building financial resilience – it’s a practical journey towards saving money and getting ahead in life.

Overall, as stated in my Barefoot Investor Review for someone in financial distress or lacking knowledge about managing their financial future, the Barefoot Investor buckets are undoubtedly an excellent resource.


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