Managing your money like the top 1% might sound complicated ,but it does not have to be .In this blog ,we can explain 6 JARS System of Money Management ,
a straightforward and affective strategy that can help you take control of your finances.The rule breaks down your income into three main categories :55 % for
Necessity Account,10% for Play, 10% for Financial freedom account,10% for Education Account,10% for long term saving for spending account and 5% for give account.
55%:Necessity Account
The 55% allocated to Necessity Account .This portion of your income should cover essential expenses such as rent or housing,food,trasportation,insurance,groceries,hea
lthcare,utilities or medical.By keeping track of these necessary costs,you can ensure that your basic needs are met without overspending.Budgeting for these
essentials helps you maintain a stable financial foundation ,which is crucial for long -term financial health.For example
if you earn 1 lakh
you can allocated 55,000 /-(Necessity Account)
or
you can allocated 10,000/-(Play Account)
or
allocated 5,000/-(Give Account)
or
allocated 10,000/-(Financial freedomdom Account)
or
allocated 10,000(Education Account)
or
allocated 10,000(Long term saving account)
10%: For Play Account
he 10% allocated to Play Account.Its important to occasionally indulde yourself with a nice message ,some new cloths and fancy dinner.Make sure you use up the money
from this jar at least every few months.This allows you to spend without guilt and to also gradually improve your standard of living as your income increase.
For example:
if you earn 1 lakh
you can allocated 55,000 /-(Necessity Account)
or
you can allocated 10,000/-(Play Account)
or
allocated 5,000/-(Give Account)
or
allocated 10,000/-(Financial freedomdom Account)
or
allocated 10,000(Education Account)
or
allocated 10,000(Long term saving account)
5%:For Give Account
The 5% allocated to Others people Help Account..This portion of your income should cover essential expenses such as Charity.Beside the feel good factors of helping others,
giving away part of your income also helps you to sub-consciously develop the wealth mentality that you have more than engough to give away.For example
if you earn 1 lakh
you can allocated 55,000 /-(Necessity Account)
or
you can allocated 10,000/-(Play Account)
or
allocated 5,000/-(Give Account)
or
allocated 10,000/-(Financial freedomdom Account)
or
allocated 10,000(Education Account)
or
allocated 10,000(Long term saving account)
10%:For Financial Freedom Account
Financial freedom refers to the first and most important of your life.The 10% of allocated financial Freedom Accuont.This portion of your income should cover essential expenses such as Financial Freedom Account
Create a financial freedom jar account and deposit something into it daily and however small.The idea is to keep financial management top of mind and a daily commitment
made towards your financial freedom. For exmaple
if you earn 1 lakh
you can allocated 55,000 /-(Necessity Account)
or
you can allocated 10,000/-(Play Account)
or
allocated 5,000/-(Give Account)
or
allocated 10,000/-(Financial freedomdom Account)
or
allocated 10,000(Education Account)
or
allocated 10,000(Long term saving account)
10%:For Education Account
The 10% allocated to Education Account.This portion of your income should cover essential expenses such as books,courses and seminars.The More knowledge and skills
you aquire ,the greater your earning capacity.And the more you earn ,the more you need to learn.For example
you can allocated 55,000 /-(Necessity Account)
or
you can allocated 10,000/-(Play Account)
or
allocated 5,000/-(Give Account)
or
allocated 10,000/-(Financial freedomdom Account)
or
allocated 10,000(Education Account)
or
allocated 10,000(Long term saving account)
10%:For Long Term Saving
The 10 % of allocated saving and investing of your income such as emergency fund,future expenses(sinking fund),retirement fund),education fund,marrige fun,short term fund or passive income.within this category ,its wise to set aside 3-5% as an emergency fund .This fund facts as a financial safety
net ,protecting you from unexpected expenses like medical emergencies or urgent home repair.The remaining portion of this 10% should be invest in reliable option
such as index funds,which offer a balanced and diversified approach to growing your wealth over time.smart investing can help you build a secure financial future
and achive your long term goals.For example
if you earn 1 lakh
you can allocated 55,000 /-(Necessity Account)
or
you can allocated 10,000/-(Play Account)
or
allocated 5,000/-(Give Account)
or
allocated 10,000/-(Financial freedomdom Account)
or
allocated 10,000(Education Account)
or
allocated 10,000(Long term saving account)
FAQs About 6 Jar Method of saving
What is the six jar saving method?
It’s called the JARS money management system. Basically, using this system, you split your money up into six different accounts, and you have percentages of your money to put into each account. You can use bank accounts or actual jars.
What is the Jara system of money?
The 6-jar system is a popular way to begin teaching children how to budget. With this system, you give your child three clear jars, each representing a different fund: spending, saving, and giving. The child will then divide their money into the jars with your guidance.
What is the jar method?
Implementing this method is easy. You’ll start with three glass jars: one labeled saving, one labeled spending, and one labeled giving. Each time your child receives money— whether it be a gift from a relative, their weekly allowance, or running a lemonade stand— help them divide the cash into the three jars
Conclusion
The 6 jar method of saving is a money management strategy that involves dividing your income into six different categories, or jars, for specific purposes