Money is not everything, but money is able to assist you to achieve your dreams. Thus, you might want to master your money the best way. However, managing money is never easy if you don’t have techniques. That’s why you should know about the 6 Jars Saving Method, which will help you manage your expenses and build savings.
Choose your spending priorities
To Save and Spend the right way, first, look carefully at everything you spend money on – and decide which of them are ‘needs’ and which are ‘wants’:
- Start by listing your needs – these are your rent or mortgage, and other essential bills such as gas and electricity.
- When the basics are taken care of, look at your wants. These might be extras, such as going out and hobbies. Or they might be longer-term goals, such as paying off your debts or saving for Christmas.
- If you can’t afford all your wants, you’ll have to decide which matter most to you or look at ways of cutting costs.
- Imagine a jug filled with water that represents the money you have coming in each month. Now imagine some empty jam jars – one for each thing you need to pay for each month. Then decide how much money to put in each jar.
Now you have your priorities list, but how do you afford for all but still have money left to save? The answer is the 6 Jars Saving Method.
What are the 6 Jars Saving Method?
This method is developed by T.Harv Eker and revealed clearly in the famous “Secrets of the Millionaire Mind”. Basically, it requires us to split our earnings into 6 separate jars or accounts with accordant percentages like below:
Jar #1. Necessities expenses (55% of income)
These are the costs of utility bills, food, inexpensive clothing, transport, mobile communications, etc.
Jar #2. Expensive purchases (10% of income)
Well, in this jar (or, more correctly, in a separate bank account) you need to save money, at the expense of which you will make expensive purchases – those that are not able to pay from your current expenses. That is, achieve your financial goals.
Jar #3. Savings (10% of income)
In the third part, according to the method of jars, you should not spend under any circumstances. In the third jar, a certain monetary asset should be formed, which will constantly increase. This jar will become a source of passive income for you: it is advisable to place the funds from it on a fixed-term deposit in the bank or invest in some other conservative tools for saving and increasing money.
Jar #4. Education (10% of income)
For a full life in modern conditions, a person must regularly engage in self-education. And this most important rule of life provides for the method of jars, allocating a separate jar for training and self-education and as much as 10% of all income to fly. These are the means by which you will receive and update your knowledge, skills, and abilities.
Jar #5. Hobby and entertainment (10% of income)
Do you like to pamper yourself by buying something that you don’t need or spending money on entertainment? Please: the 6 jars method gives you that opportunity. But within 10% of the income, no more.
Thanks to this jar a person will be able to periodically “waste money” and get moral pleasure from it.
Jar #6. Gifts and charity (5% of income)
And finally, in the last jar, according to the method of six jars, only 5% of the income should be set aside, which will be used for gifts to relatives and friends (after all, it is so important to periodically please people, and not only for the holidays). And if “extra” money accumulates in this jar, you can donate it to charity: this is also a necessary and right thing to do.
How to bring the 6 Jars Saving Method into reality?
Understand the concept might be easy for everyone, but to do it, practice, and keep the habit of tracking your money monthly are difficult. That’s exactly the reason why the 6 Jars Money Management App (6JMM) was developed. This is the app created by Alan Al Voice Lab to support you on your way to financial freedom. This would properly be your preferred money assistant of all time for its latest techniques and smart utilities that you can’t find in other money apps!