Money saving — The Jar Method. Image from…
By: Robbe Claessens
Tags: Money Management, Saving Money, Personal Finance, Finance, Money

Why most of us can’t save money

One of the main reasons why people cannot save money is because they don’t manage their money properly. At the end of the month, you get your paycheck and collect the money in one place called your bank account. But when you do your dishes or do the loundry, you don’t put all of the things in 1 big drawer would you? No, because that would create chaos. It is exactly the same with money management. Instead of one bank account, why not create multiple bank account (aka jars) and split your money into these different jars with each having their own unique purpose! This will not only help you manage your money better, it will also give you a better overview of your expenses!

The jar system

Originally, this idea is not mine. It comes from T. Harv Eker, a succesful business man and writer of the best selling book Secrets of the Millionaire Mind, a must read! What Harv suggests is creating 6 different jars with a percentage saving ratio:

Necessities — 55%

Long-term — 10%

Play — 10%

Education — 10%

Financial — 10%

Give — 5%

NOTE: I did not say that you need to put ALL your money in it! But we will get to that later.

1. Necessities

As the name suggests, this jar is only for really important things like: Food, paying the rent, water, electricity, …

2. Long-term

These are in general big purchases or unexpected expeneses (for example your fridge breaks and you have to buy a new one). This category is also suited for vacations!

3. Play

This jar is the fun-jar! There is one basic rule for this jar: you have to spend it all before the end of the month on things that make you feel happy! How great is that? :-) It is used as a reward for managing your money.

4. Education

Pay yourself first! This means that you have to invest in yourself first before everything else, even paying your debt! You grow by investing in courses, coaches, seminars, books, … Do this and it will make you a better human being. Additionally, it also helps your make more money by increasing your earning ability!

5. Financial

This jar is for your passive income. This jar is also known as the Freedom Account. You only use this jar to invest in: stocks, real estate or other passive income streams. This is obviously a really important jar!

6. Give

The world would be a better place if everyone was doing this… Investing in others. Use a part of your loan to help others out. Find a charity you like and donate some money to it. You will help out a lot of people/animals/… by doing this, build up your karma!

Why you should do it

The main reason is that when implementing this strategy, you know exactly how much you can spend on each activity. You have 10% of the amount ready to spend on fun things! And the fun part is.. YOU MUST SPEND IT ALL BEFORE THE END OF THE MONTH!! You will also create a jar for your future investments, this will give you the ability to make an investment in a second appartement over the years or have the long-term jar for paying for your childrens education. This method will give you a way to save money but also give you the space to have some fun or to go on vacation.

How much money should I put into it?

That really depends on you, you should start with an amount that is comfortable to you. In the beginning, it is the principle that matters. Over time you can even apply it to your whole paycheck. Try starting with 1% of your income, when you feel comfortable, go to 2% etc. Start with as much as possible and you will find yourself in a good state where you are finally managing your money... AWESOME YOU!

Conclusion

This method helped me build up some money, having fun and helping others. Don’t apply the method to your whole check when starting out. Just build it up one step at a time. I used to be someone who was constantly saving and I sometimes felt depressed, because I wasn’t doing anything with my money. This system allowed me to spend 10% of my income on fun things like buying a watch, or going to a nice restaurant… I am very grateful I got to learn this money managing technique and since it helped me so much, I wanted to share it with you guys! I put some extra reading material below, so you can learn more in depth about these things.

If you liked this article, don’t forget to clap! It is my first article and I really enojoyed writing it. I hope some of this information helps you like it helped me. Thanks for reading!

Reading material about money management