If you've ever stared at three months of inconsistent income and wondered "how much of this is actually mine?", the six-reserve system is the answer. It separates your money into six purpose-built buckets, in a specific priority order, so that every dollar you earn has a job before you spend it.
This article walks you through setting all six up for the first time. By the end, you'll have a working reserve allocation that takes care of itself every time income hits.
Why six reserves?
Most personal-finance tools assume you get a paycheck on the 15th. Reserves work differently. Instead of envelopes for spending categories, you have tiered buckets for risk — and ReservWise fills them in priority order, automatically.
The order matters more than the percentages. If you allocate 1% to Survival but in first priority, you'll always have enough to keep the lights on. If you allocate 50% to Survival but it's last, you'll keep robbing it.
Tier 1 — 🔴 Survival
The non-negotiables. Rent or mortgage, utilities, groceries, basic transportation, minimum debt payments. If income stopped tomorrow, this is what you'd still need to pay this month.
Set your monthly Survival target to your real survival number — not the comfortable number. Most users come in too high here and end up under-funding the upper tiers.
Tier 2 — 🟠 Business Ops
The cost of doing business. Software subscriptions, contractors, ad spend, hosting, equipment maintenance. If you stopped paying these, your business would slow down within 30 days.
Be honest about recurring vs. one-time. ReservWise will catch ad-hoc spend separately; this tier is for the predictable monthly drumbeat.
Tier 3 — 🟡 Tax Reserve
The bucket the IRS doesn't know is there yet. ReservWise auto-fills this every time income hits, based on your effective tax rate. Don't touch this. Seriously.
If you're a sole proprietor in a 25%-bracket state, your effective rate including self-employment tax is probably 30–35%. Set it once in Taxes & Buckets and forget about it until quarterlies.
Tier 4 — 🟢 Growth
Reinvestment. New equipment, hiring, an investment in skill (course, conference), or a marketing test. This tier is what separates a stable freelancer from a growing business.
If you're under-funding Growth to fund Lifestyle, you're shrinking. ReservWise will flag this in your runway forecast.
Tier 5 — 🔵 Lifestyle
Discretionary you. Travel, restaurants, the new keyboard, the better coffee. The goal here isn't to minimize Lifestyle — it's to cap it so it can't eat the upper tiers.
Tier 6 — 🟣 Wealth Building
The long game. Index funds, retirement, a real emergency fund (separate from Survival), or pre-paying mortgage principal. Most users don't fund Wealth Building meaningfully until tiers 1–3 are stable.
That's correct. You can't build wealth on an unstable foundation. Don't feel guilty about a small Wealth Building number for the first few months.
How to set them up in ReservWise
- Open the Reserves tab.
- Click
Set up six reserves— the wizard will create all six in order. - For each tier, enter a monthly target. ReservWise will suggest one based on your last 90 days of income (if Plaid is connected).
- Pick your allocation order. Default is the canonical 1–6 order above. You can override, but read the warnings first.
- Save. Income from this point forward will flow into reserves automatically.
What to do next
- Read Cashflow Forecasting to understand how reserves connect to your runway.
- Read Setting Surplus Allocation Rules to handle overflow.
- Wait two weeks. The system needs real income events to start projecting accurately.
Reserves don't make you rich. They make you impossible to derail. That's a different — and arguably more valuable — outcome.