Purchasing a financially secure life is a challenging task requiring plenty of skills as an expert mapmaker and GPA programmer. Yet I’m saying the truth that dealing with money may be overwhelming and difficult for many people. The complicated missions in the financing process in addition to bad money habits can overlap throughout your life, making it relatively impossible to succeed. Knowing this fact and as an experienced one, I’m providing you a personal budgeting guide as your quickest and most effective ticket to achieving your financial independence as well as other goals, which is The Six Jars.
A Definition of Personal Finance
Personal finance is a term encompassing all of the matters related to managing your money. It’s about how much you spend, save, get into debt, and invest.
There are many factors that your money depends on, such as age, education, ambition, family, country of residence, all play a role in your personal finance strategy. Many financial fundamentals need to be accomplished by individuals, with a bit of organization and a commitment to make the most of what you earn.
Once you have your own suitable personal finance technique and master it, money will no longer be a matter for you! And The Six Jars down here is the guide that I’m about to introduce you.
Achieving Short-term and Long-term Goals
Building financial stability is a never-ending balancing act. Some of the money balls you have in the air will be targets you want to achieve as soon as possible. Other goals may have an end date that is a decade or more in the future, but they must be started sooner rather than later.
It is entirely up to you whether to write your goals down. Just make sure you allow yourself some alone time to think it through. Here’s a basic exercise: What would make you happy financially? At its core, a financial plan provides the resources to make you feel safe and secure, allowing you to focus on living rather than worrying.
Then they are your motivation to get into your good budgeting process. Now, it’s time for you to discover the true method.
The Six Jars – The Best Personal Finance Guide
As revealed in the well-known “Secrets Of The Millionaire Mind” of T.Harv Eker, this magical 6 Jars System leads you to your financial freedom in the fastest and easiest way. It is also a relatively simple concept that everyone can understand and apply, that’s why it’s such a popular way of controlling money flow nowadays.
According to the system, you just have to divide your money into 6 different jars like below:
1. Necessities Account (NEC – 55%):
This money should be spent only on real necessities like utilities, food, mortgage payments, transportation, mobile communications, insurance, etc.
According to T.Harv Eker, 55% of personal income is enough for that expenditure. But you may have the bewilderment that “100% might not be enough, now 55% is impossible”.
No worry, my advice is “calm down” as you can adjust the proportion, and you should also adjust your lifestyle to adapt to this amount of money then you’ll know 55% is more than enough! Besides, you still have money saved in other jars, as well, if you spend all your earnings on necessities, you can never improve your financial situation.
2. Financial Freedom Account (FFA – 10%):
Also known as a Wealth Building Account. This is the Golden Goose jar, where golden eggs are laid. It is accompanied by the financial principle of “Pay Yourself First”. It is referred to as your Passive Income. You have to keep the money in this jar and shouldn’t spend it. You may only utilize it to invest in areas with high returns and earnings.
3. Long-term Saving For Spending Account (LTS – 10%):
You should set away 10% of your income for large expenditures such as expensive cars and holidays. It can also be utilized as a rainy-day fund. If you are currently in debt, use half of the jar to pay off your bills.
4. Education Account (EDU – 10%):
It is also known as the “Personal Development Account.” You may use the money saved in this jar to further your knowledge by purchasing books or attending seminars in your field.
You should certainly invest in this jar because “As your knowledge rises, so does your money.”
5. Play Account (PLY – 10%):
Everyone wants to have a good time and have some fun in their lives. Traveling, eating delicious cuisine at 5-star restaurants, watching movies on weekends, or anything else may be fun. You will need to save 10% on this.
6. Give Account (GIV – 5%):
Finally, in the last vessel, according to the six-jar technique, it is essential to postpone just 5% of your revenue that will be used for presents to family and friends. In reality, it is very vital to make people enjoy themselves on a regular basis, not just during the holidays. And if “extra” money accumulates in this jar, you can donate it to charity: this is also the ethical and proper thing to do.
Want to feel more in control of your finances?
If so, it’s time for you to dive into this 6 Jars of Money Method and apply it on a daily basis. Anyway, the first steps are hard, and keeping healthy habits on track is not easy. Fortunately, I am here to help you out!
The 6JMM App is the app developed by our team Alan Al Voice Lab with the hope and enthusiasm of developing human well-being as well as assist people in achieving desirable life. It is always updated and improved to serve users the best.
Step by step we can help you cut your spending, develop core saving muscles, and create better habits for the future.