My wife got this newsletter from one of her subscriptions and shared it with me. I sort of liked the money jar concept, so I decided to share it in return. For further information on this, you can visit here.
One of the key differences between how the rich and the poor play the money game is how they manage their money. It may not sound like the most “fun” subject, but once you realise how much more you’ll enjoy the money you earn, you’ll be hooked! T. Harv Eker discovered this system which he called…
THE MONEY JARS SYSTEM
It’s so simple, anyone can do it. The key is to develop the habit of managing your money. The amount doesn’t matter. Whenever you receive income, from salary, rentals, commissions, whatever, divide it into the following accounts…
LONG-TERM SAVINGS: The money you put in this account can be used for major expenditures. Savings for your children’s education, buying a house for yourself, or contingencies like hospital bills.
EDUCATION: Use this account for your continuing education. Books, seminars, events, courses, anything that will benefit your learning. If you are not growing, you are dying!
FINANCIAL FREEDOM ACCOUNT: You must NEVER, NEVER spend the money that you put into this account. Any money inside can be used only to acquire passive income streams to grow your net worth. If you spend money in this account, for whatever reason, you’re killing the “Golden Eggs”! This is probably the most important part of your money management and the key to building wealth.
PLAY: Finally! Something fun! You get to spend this money on pampering yourself. Massages, movies, the latest tech gadget, champagne, manicures, anything outrageous that makes you feel really good. There’s only one rule: you have to blow this. Play money away every month! If you need to save up for holidays that require a little more money, you can accumulate this account over a few months.
NECESSITIES: Pay your monthly expenses – phone bills, utilities, clothing, food, transport, groceries – out of this account. if you cannot survive on what you apportion here, simplify your lifestyle. Instead of eating in restaurants all the time, go to the food court.
GIVE: You can use the money here for donations to charities, use it to help someone in need. When you give to serve other people, it always comes back to reward you in some way.
Source: Turn your jar of money into a pot of gold