Money – is that every one know and every one has in life (little or much). It’s so common with us. But the question is how many people know the way to manage their money? I think the answer is “not much”.
Yes, that’s the reason why now I introduce you one very useful method to manage your money: the “Jars” method.
The Money Management Method: “Jars” was invented by T. Harv Eker (author of the best seller “Secret of Millionaire Mind”), who is master of speech, who is called “trainer of trainers”.
Why this method is called “Jars”? Because your money will be shared into 6 jars, which symbolize 6 personal accounts. Imagine when you have income everymonth (little or much money is not important). That amount of money will be divided into these jars with the corresponding percentage.
- Financial Freedom Account (FFA) – 10%
- Long term saving for spending account (LTSS) – 10%
- Education account (EDU) – 5%
- Neccessities (NEC) – 55%
- Play – 10%
- Give – 10%
When you look at these accounts, maybe you think some of these accounts seem to be overlapped, but the truth is each account has its own goal and effect.
1. Financial Freedom Account (FFA) – 10%
This account is for investment. The effect of it is to help you always have an availabe amount of money for investment purposes in the future. And the reason why it’s called Financial Freedom, because only investments (reasonable and effective) can help you become rich and free when you don’t need to work but still can live comfortably, when all of your expenses are paid totally by income from investments.
2. Long term saving for spending account (LTSS) – 10%
This account you have to put it alone in a long time for big expenses in the future. For example, when you’re at school, you want to buy your new cell-phone or laptop, so this is the money for that expense (because it’s big with you).
The effect of this account is to show you which goal you want to kick, and to save money step by step for that. With these big expenses, you need to have a long-term plan. If at that time you use up all of your money for these expenses, it will affect your another expenses.
3. Education account (EDU) – 5%
This is education account for yourself, it means for you to improve yourself. This account can be spent for courses, books, ect. Remember that this is account for your education, not for other. You always have to improve yourself , only with that you can ensure your seft-worth. This is the most profitable investment of your.
4. Neccessities (NEC) – 55%
This account is for your neccessities, such as food, travel, including shopping for essential things. Perhaps you may wonder whether 55% is enough or not. But in fact statistics shown that 55-60% is quite enough for everybody. If you need more, that means your spending isn’t reasonable enough.
The effect of this account is to show you the limit of your spending, from which you can change your style life to suit with it.
5. Play – 10%
Yes, this is account for you to play, to satisfy your luxury demands. Maybe you want to have a new skirt (just because you like, not because of your need), buy new disc, or just travel with friends. And remember that this is your required spending everymonth. Whether you are saving money, you still need to spend for yourself.
The effect of this account is for you to reward yourself (after one month worked hard for money), and just only with that way you can see the money you earned, and you will have motive to earn much more money.
6. Give – 10%
This account is for other. There always have many activities for you to use this account. It can reduce from 10% to 5% if your NEC need to rise to 60%. But you still need to share money with other.
The effect of this account is the theory Law of attraction; when you give you will receive. Help other people you will feel happy and it’s the most important thing for you.
Secret of Millionaire Mind - JARS Money Management Method
I hope when you read this article, you know how to manage your money, your life. Just practise right now, and a bright future is waiting for you.