Manage Personal Spending With The Rule of 6 Jarsby Stacy K. Blogger
This is the 6 jars money management system which is widely applied in the world. Let's see how people are saving and investing.
Managing and spending money are two important and difficult things that are just as difficult as the question "How to make money". However, answering the question "How to spend money?" will help you develop or make a profit on the money you earn. Otherwise, you will stay stagnant or be stuck in debt.
Why we should learn to manage our spending?
There are people who have the same starting point, do the same job with the same salary. But some don't make any progress while others gradually become more prosperous. What do they do with the same amount of money? Where do they invest in? How do they spend their money? These are what decide their success.
If you often encounter problems such as your spending exceeds your wages, you have to borrow money at the end of the month or even in the middle of the month, and you never have savings, then surely you have problems with personal management. You need to find a solution right away.
Or maybe you are looking to make an investment, you want to save money to buy an expensive item or take a long trip but your account is always empty. That's when you should start thinking about learning personal financial management.
This rule was first mentioned in the book "Secrets of the Millionaire Mind" by T. Harv Eker. This book and this way of thinking have created a trend that affects the financial management of many people in the world.
In fact, the 6 jars here are not exactly just jars (in physical form), but 6 parts of money divided for different purposes from an income. The amounts are specifically divided with the following purposes and quantities:
1. Necessity account – NEC – 55%
The NEC jar helps to ensure the daily necessities of life. This jar is used to pay for meals, entertainment, shopping bills and other expenses. These are necessities and are required to ensure your life.
2. Financial freedom account – FFA – 10%
This is relatively new for those who are just starting to learn financial management. This is what determines your freedom in the future. This money will profit from itself and you don't have to work to create interests. Investing in stock is an example.
3. Education account – EDUC – 10%
You are the most valuable asset you have, so never forget to invest in developing yourself and Education account is born for this purpose. This money can be used to buy books, courses or anything that helps develop yourself.
4. Long-term saving for spending account – LTSS – 10%
Many people often overlook this and think they only need to save when they have a purpose. But actually it is necessary to always have an account for long-term purposes and this account can't be used for any other purposes except for the emergencies. You will see a miracle after a few years maintaining this amount.
5. Play account – PLAY – 10%
One cannot be totally financially successful without enjoying the money they make or earn. So use this account to reward yourself and do things that make you happy.
6. Give Account – GIVE – 5%
Never forget to give love and gratefulness. Use 5% of your income for people you love and for those who need help. You will find that this smallest sum has never been unnecessary.
In fact, the above 6 rules are just part of personal financial management. There are other small tips on the long journey of mastering these skills such as buying quality second-hand products, apply a minimalist lifestyle, making use of coupon websites when shopping online, etc. However, applying the 6 jars money management system is key to take a step closer to your future financial freedom.
Created on Sep 3rd 2019 23:02. Viewed 88 times.