The jars system is an easy and simple way to manage your money. In the beginning I resisted this system. Eventually I gave in and began to see the financial rewards first hand. In my last post I shared some of the benefits of using the JARS to manage money. In this post I’ll cover my experience on how the jars work.
Why Physical JARS?
I’ve had a few people ask me why I have the physical jars sitting on my desk. Some have asked, “Steve, do you actually put money in those jars?” The answer is, ‘it depends’. Let’s explore the question in more detail.
Currently, I have setup the jars electronically so that all transactions are completed automatically on a monthly basis. Most of the work is done online. From this stand point you might think that there is no need for the jars. One of the reasons I have the jars on my desk is because they help me build the habit of managing extra money. Keep in mind that visual is memorable. The jars are a physical reminder of where my money is going.
Sometimes I run into extra cash or happen to find change in my pocket when I get home from work. When this happens I place the cash into one of the jars. Most times I’ll place the money into the FFA jar -the jar used to build our nest egg.
The physical action of placing the money into the jar is important. Once I place the money into the jar it gets me thinking about ways to use that money. For instance, when I place money into my FFA jar it triggers my sub-conscious to find ways to invest. The action of putting the money in the jar is like planting a seed. Once the seed is planted my mind works on creative ways to invest.
Sometimes I’ll place my extra money into the PLAY jar. Similarily, this will trigger my thought process to find ways to spend money on play. It’s like a game. Every time I put money into one of the jars my mind starts working to find ways to spend that money. This process is a great way to build your money managing habit.
Unfortunately, most people don’t use a system like this and they tend to always be in debt. One of the reasons they’re always in debt is because they use their extra money to pay their debt. If you’re consistently using extra money to pay your debt then you’re teaching yourself that habit – to pay debt.
The more you do it, the better you get at it. Eventually this habit becomes ingrained in you and it happens unconsciously. This habit can also lead to a poverty consciousness. The more times you pay your debt, the more you think about it. The more you think about it, the more you feel it. This will attract more debt. The way to move away from debt and into prosperity is to setup an automatic debt payment program and read my article, Focus On Prosperity.
The JARS
As a recap, here are the jars and a short description of each one.
> Necessity Account (NEC – 55%): This account is for managing your everyday expenses and bills. This would include things like your rent, mortgage, utilities, bills, taxes, food, clothes, etc. Basically it includes anything that you need to live, the necessities.
> Financial Freedom Account (FFA – 10%): This is your golden goose. This jar is your ticket to financial freedom. The money that you put into this jar is used for investments and building your passive income streams. You never spend this money. The only time you would spend this money is once you become financially free. Even then you would only spend the returns on your investment. Never spend the principal or else you’ll go broke!
> Education Account (EDU – 10%): Money in this jar is meant to further your education and personal growth. An investment in yourself is a great way to use your money. You are your most valuable asset. Never forget this. I have used education money to purchase books, CD’s, courses or anything else that has educational value.
> Long Term Saving for Spending Account (LTSS – 10%): The money in this jar is for the bigger nice to have purchases. As I said in my last post, Trisha and I are going to Whistler, BC in January 2008. The only reason we’ve been able to make this happen is because we’ve accumulated a nice sum in our LTSS. A small monthly contribution goes a long way.
> Play Account (PLAY – 10%): This is my favorite account. PLAY money is spent every month on purchases you wouldn’t normally make. The purpose of this jar is to nurture yourself. You could purchase an expensive bottle of wine at dinner, get a massage or go on a weekend getaway. Play can be anything your heart desires. I’ve spent my play money on a night of sake and sushi at a Japanese restaurant; hockey equipment that I didn’t really NEED but wanted; a night out on the town with a limo, champagne, etc.
> Give Account (GIVE – 5%): The money in this account is for giving away. Trisha and I give money every month to the Sick Kids Hospital Foundation. We also use the money in this jar to give to family and friends on birthdays, special occasions and holidays. You can also give away your time as opposed to giving away money. You could house sit for a neighbor, take a friends dog for a walk or volunteer in your community. When you give your money or time you’re sending a sign of abundance to the Universe. You’re telling the Universe that you have plenty of everything, you’re abundant. Giving signals abundance. This will magnetically attract more abundance to you.
How the JARS Work
Here is a sketch of how we use the jars. Trisha and I deposit all of our personal income into a necessity account. In our case it’s our checking account. The money in our necessity account pays for all of our expenses. The remaining money is distributed into 5 other accounts. See the sketch below.
I learned very early in the process that the jar percentages are not critical. To guarantee your financial success just start using the jars and build the habit. This is key. It doesn’t have to be perfect when you start. You could even start by splitting $10 every month into the jars. There is an inspiring story in ‘The Secrets of the Millionaire Mind’ about a woman who started splitting $1 into the jars every month. In her first month she put 10 cents into her play account, 10 cents into her FFA, 10 cents into her LTSS and so on. Later that month she used her play money to buy a piece of bumble gum. She received a mini comic with the bubble gum package that she bought with her play. She read the comic and got a laugh. Two years later she deposited a $10,000 dollar check into her FFA account. Now who’s laughing?
If she can do it then so can you.
I highly recommend the JARS system to anyone who wants to make the most out of their money. If you’re looking for a simple way to make more on what you already have then use this system.
Want to learn more? Check out T. Harv Eker’s Millionaire Mind Intensive. For a limited time you can purchase Harv’s, ‘The Secret’s of the Millionaire Mind’, and receive two free tickets to this seminar.
