The current general situation of a pandemic requires everyone to work from home, which results in several matters relating to convenience, efficiency as well as income. In another case, doing an online job offers you a chance to build a work-life balance, a thriving career, and wealth at the same time. But what about your financial freedom? This doesn’t depend on the amount at all but the habit. It might be hard for you, however, the 6 Jars Concept is available to solve your problem.
What Makes The 6 Jars Concept Valuable
The idea of this 6 jars concept is really easy to understand. It can even be applied well to your business. You just have to separate your money into 6 different jars for specific purposes. You can use physical jars, envelopes, or bank account, but I highly recommend you the most convenient way which is using a digital app like the 6 JMM, with which you only type your income amount into it then everything is done for you!
What is in 6 Jars Concept?
1. Necessities (55%)
This jar will take 55% of your earnings, which is used for purchasing food, mortgage payments, bills, gas, oil, insurance, etc. 55% is a reasonable proportion according to many people, so if you find yourself not covering all your necessities with this amount, you properly need to do one or both of these things:
– Simplify your life – figure out how you can spend less
– Earn more – figure out how you can earn more
2. Financial Freedom account (10%)
10% of your money will go into this Financial free done jar. You must remember that The money in this jar can only be used for investments (with returns or profits). This jar is used for building wealth for your future financial freedom. You must never spend this money.
Create a Financial Freedom Jar and deposit something into it daily, however small. The idea is to keep financial management top-of-mind, and a daily commitment made towards your financial freedom.
3. Long term Savings (10%)
10% of your income goes into the jar called Long Term Savings for Spending. The objective of this jar is to save money for future expenses (e.g. a new car, a vacation, a new couch, gifts, repaying debts…).
4. Education (10%)
Successful people constantly invest in and grow themselves. Hence, 10% of your income goes into the Education jar. The more knowledge and skills you acquire, the greater you’re earning capacity. And the more you earn, the more you need to learn (how to manage your additional wealth, how to bring your income to the next level, etc.). Use the money from this jar for personal or professional development (e.g. books, courses, seminars).
5. Play (10%)
According to the rule of 6 jars, 10% of your income goes into the Play jar. It’s important to occasionally indulge yourself with a nice massage, some new clothes, a fancy dinner… To avoid over-spending or under-spending, make sure you use up the money from this jar at least every few months. This allows you to spend without guilt, and also gradually improve your standard of living as your income increases.
6. Give (5%)
10% of your income goes into the Give jar. However poor your circumstances may be, there will always be someone who is in an even more dire state. Besides the feel-good factor of helping others, giving away part of your income also helps you to subconsciously develop the wealth-mentality that you have more than enough to give away.
It’s All About Building The Habit
Take this note: Financial management is a habit. So the percentage of the amount doesn’t matter, what matters is that you practice distributing your money now and follow strictly to that. Dividing money into these 6 jars concept should be a daily task. You can adjust the percentage according to your condition, however, try to follow the standard as it was researched and built up by the previous experience of many people. If this could be your motive power for you to work hard and find out more passive sources of income as a supplement, it would be great!
Anyway, if you are in a difficult situation like too many debts or payables, you can have these proportions instead:
- 75% Necessities
- 5% Financial Freedom Account (FFA)
- 5% Long-term savings for spending (LTSS)
- 5% Education
- 5% Play
- 5% Give
Customize the numbers as much as you want. But don’t forego any jar. Each jar has a purpose to make it easy and systematic for wealth accumulation. Aside from the Necessities Jar which is quite obvious, here is the significance of each jar.
Once again: to ensure success in financial management, you just need to start using the system and build habits. New habits really are the key to success. Let the amazing app 6JMM help you!