As parents, as the pillars of your family, you have to master several skills to ensure a stable and wealthy future for all members. One of the most important skills is money management, which takes a great percentage in deciding how quality your life is. If you’re still finding a way to tremendous financial freedom, you won’t want to miss the 6 Jars System. In this article, I’m going to share this method of budgeting which parents should definitely know.
The Rules Of 6 Jars
This concept comes from the famous book “Secrets of Millionaire Mind” by T Harv Eker, which is relatively a simple and effective system that works for everyone. Basically, the 6 Jars Systems requires you to split your money into 6 different accounts or jars, each of which reveals distinct purposes and contains different proportions of your earnings. In fact, you can use a bank account or actual jars.
Jar 1: The Necessaries Account (NEC – 55%)
You’ll put 55% of your income into these first jars, and this will be used for everyday essentials. The money in this will cover all your expenses of rent, bills, groceries, taxes, and transport, etc. If you’re parents now, you properly find those spendings familiar, right? No matter how much you earn monthly, just simply put 55% of it into this account. Don’t take any money for other purposes from this jar. It may sometimes be hard to maintain your life within this percentage but you have to follow the rule strictly, start working on strategies to reduce spending and you won’t regret the result.
Jar 2: Financial Freedom Account (FFA – 10%)
Financial freedom basically means “the ability to live and maintain your lifestyle which you desire without having to work or relying on anyone for money”. Hence, the financial freedom jar is created to be the corpus taking care of your family and your needs in the near future. The FFA takes up 10% of your total income, the idea here is to grow this amount of money so that it becomes a golden goose that lays golden eggs called Passive Income. It is your ticker to financial independence, so make sure that you will follow the rule and save up this money. You can also invest the amount of FFA jar into stocks, mutual funds, portfolio management services, fixed deposits, debt funds, or real estate to create passive income sources.
Jar 3: Long-term Saving Account (LTSS – 10%)
This jar is the cornerstone of your financial independence, which is another 10% of your income. As the name implies, it’s a jar where you save for any essential spending which is needed in the near term. It is meant to be accumulated so that you can spend it later on more luxurious things like electronic items, new cars, and vacations, or medical emergencies and contingency funds. You can also use money in this jar for a child’s education and marriage’s expense or any other life goal. Remind yourself that “A small monthly contribution can go a long way”. As parents, you can use this jar to teach kids the importance of saving for a spontaneous class trip.
One tip to get you started: The 6 Jars Money Management App. This jar is crucial, and while it won’t make you rich overnight, you’ll be amazed at how fast your savings accumulate. And knowing you have a “safety net” in case things go tough can keep you calmer.
Jar 4: Education Account (EDU – 10%)
You may ask yourself this question frequently “How much time and money have you invested in yourself these days?”. This is why this education account is important. This self-explanatory jar takes another 10% of your income.
Ben Franklin said, “If you think education is expensive, try ignorance.”; And T Harv Eker said, “If you are not growing, you’re dying!”
Invest in your own growth and knowledge, and you will enjoy the benefits of a more enlightened mind. Whether it’s a higher pay in your present job or learning a new skill set, the financial benefits for improving yourself are obvious.
If you are satisfied with your current level of education – use this jar for your children’s university. If you’re looking for a way to spend without breaking the bank, you can come to 6 Jars Money Management App.
Jar 5: Play Account (10%)
Play jars are the jar most people enjoy which makes up for another 10% of your money. It comes in handy for both the savers and the spenders, which allows both types of people to have fun and indulge themselves to the right limit. This is also an important jar as it also has a role in satisfying mental health so that people will have the energy to work. You can go to some expensive restaurants or go out for a weekend break to a beautiful resort or merely buy something you want to eat. You should enjoy the fruits of your hard work after all in this way.
Jar 6: Give Account (5%)
It can be considered the social responsibility jar where you donate what you have to the needy. So obviously the money in this account is for giving away, accounting for only 5% of your earnings. Remember the amount is not important, it is the act that counts. Giving is for taking. When you’re giving your money to charity, you also take back feelings of happiness and joy. Besides, you may receive back more than you thought!
How To Manage Your Money As An Adult
Depending on the effective 6 Jars System, parents can easily control their money flows. You may need help from digital apps to keep track of your money tighter. As well, you should also instill the habits of managing finances well to your kids soon for their future.
The quickest method to perform well with money, regardless of your age, is to handle the money you have effectively. Simply demonstrate to the universe that you understand how to handle $1, and then see what occurs in your life. Allow your children to try it with the app 6 Jars Money Management!