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I love this 6-jar system. What a fun way to become financially free
Managing money with 6-jar-system is the ingenious formula which have been used by many self-made millionaires or financially free people worldwide. The rich diligently teach and pass on this formula to their children as to preserve family’s wealth. It does not matter what is your financial status, you should read this ONCE in your lifetime.
Necessity Account (NEC - 55%):
This account is for managing your everyday expenses and bills.This would include things like your rent, mortgage, utilities, bills, taxes, food, clothes, etc.
Note: If your NEC account exceeds 80% total income, you will either need to earn more money or cut back on expense in order to achieve financial freedom.
Play Account (PLY - 10%):
PLAY money is spent every month on purchases you wouldn’t normally make. The purpose of this jar is to nurture yourself. You could purchase an expensive bottle of wine at dinner, get a massage or go on a weekend getaway. Play can be anything your heart desires. But the catch is ,on the last day of ever month, you will have to squander all the money in this play account.
Act rich, feel rich and finally be rich!
Financial Freedom Account (FFA - 10%):
This is your golden goose. This jar is your ticket to financial freedom. The money that you put into this jar is used for investments and building your passive income streams. You never spend this money.The only time you would spend this money is once you become financially free. Even then you would only spend the returns on your investment. Never spend the principal.
Education Account (EDU - 10%):
Money in this jar is meant to further your education and personal growth. An investment in yourself is a great way to use your money. You are your most valuable asset. Never forget this. Education money can be used to purchase books, CD’s, courses or anything else that has educational value.
Long-term saving for spending Account (LTS - 10%):
Money in this jar is for bigger, nice-to-have purchases. Use the money for vacations, extravagances, a plasma TV, contingency fund, your children's education etc. A small monthly contribution can go a long way. You may have more than one LTS jar. If you have more than one LTS, divide the 10% between the jars according to your priorities.
Give Account (GIV - 5%):
Money in this jar is for giving away. Use the money for family andfriends on birthdays, special occasions and holidays. You can also give away your time as opposed to giving away money. You could house sit for a neighbor, take a friend’s dog for a walk or volunteer in your community or for your favorite charity.
As you live out the JARs system, you gradually realize the importance of saving, investing and planning for short and long-term events over the course of a lifetime. You will then enjoy how to be frugal at certain instances as you deem it necessary to cut back, and you will also remove guilt when you plan to mindlessly spend for a certain moment in time. You know which Jar to consume and until when. You give yourself a pat on the back through a well thought-out and balanced budget. It is hassle free.
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