6 Jars To Financial Freedom

The 6 Jars To Financial Freedom

Since young, we have all been taught on the importance of saving, saving and saving. Our parents advised us, our teachers educated us, society warned us. But many questions are still not answered. What is savings, how much to save, where do we save in, when do we save?  

A very big contributing factor as to why people tend to save intermittently is that there is no system for their savings and also the lack of discipline, succumbing to our inner devil to use up our savings for some better stuffs in our life. 

Why is having a system important? I used to save by putting excess coin each day in my piggy bank. Another person might simply save what they have left at the end of each month in their bank account. Insurance policies might be a better way though, but all the insurance jargon like endowment, guaranteed payouts, premiums, deductibles and non deductibles leaves me wondering how much i have actually saved. 

And often, the avid saver will wonder if he is missing out on the good stuff in life. One reason why people are dissatisfied with their savings or are completely devoid of it is because most people don’t have a system for saving. Some save by putting in their excess coins in a jar, while others save what’s left of their monthly salary after all expenses have been covered (and yes, that includes shopping).

So all such queries leave me wanting a system where i can track my savings, and such a system is what i found from T. Harv Eker, a millionaire motivational speaker who is the author of Secrets of the Millionaire Mind and i had the chance to attend one of his talks on this savings system called the “Jars Money Management System”, and it is to apportion your earnings by percentages and placing them into 6 different jars for 6 different purposes.

The Jars Money Management System were all taken from this amazing eye opener book i read "Secrets of the Millionaire Mind". It provided an insight to a great money saving system



1) Financial Freedom Account or FFA (10%)

Every month when you receive your salary, immediately take 10% from it and place into this FFA account. This account should only be used for the sole purpose of growing your money and should never be reduced except for investment. Any gain from investment should immediately be placed back into this account.

You should NEVER NEVER EVER EVER take money from this account.


2) Necessity Account (55%)

It will be interesting to note that one person's necessity is another person's want. Example, a car would be a luxury to me as i can travel to my workplace or any place of my interest by Bus or Mrt as i stay near such means of transport. It would be good to have but not a must for me. For a person whose livelihood depends on the urgency to reach his destination, i would say it's a need to have a car. Probably like in the case of housing agents.

It would be a matter of some lifestyle changes if we are to stick to this 50% necessity spending habit.
We can choose to dress simpler by buying new clothes or shoes every other month rather than every month.
Movie watching shall be reduced to a every blockbuster affair instead of a monthly one.


3) Long Term Savings (10%)

Similar to the FFA account, this is also a savings jar. However, the difference is such that we will be saving for a specific purpose. Its could be a long awaited holiday, or perhaps an item of desire like the state of the art notebook. Set aside 10% of your income to cover such expenses.


4) Education (10%)

I find this jar rather weird but on second thought, educating our self is one area we should not neglect. You can use this account to buy self-improvement books, attend seminars on wealth strategies or simply take up a course to learn something you always wanted to but never had the time or excuse to do so.


5) Play (10%)

I love this jar the most! The best thing about this jar is that i can spend the money from this jar on whatever i want without feeling guilty. The general rule is to empty this jar every month. Go to the most expensive restaurant, get the top range massage, go first class on everything.

Well, since we have already set aside money for our other purposes, we can spend this jar without worries. Most importantly is to get that feel good factor in ourselves. The idea is to let loose and to relieve us from the restrictions on our spending as one day our inner devil may break free and we might just make a wrong decision due to that and lose all our savings based on a wrong judgement.


6) Give (5%)

This might not come across your mind, but we are always spending and giving to other people. Whether it's for a birthday, housewarming or even attending a wedding, we do spend a good amount every month for such purposes.

Having highlighted the allocation for the 6 jars, keeping these jars in a place visible to you is one way to help maintain this habit and a constant reminder about your spending habits. However, if you feel insecure placing money in jars at home, an alternative is to keep the money in a bank account as long as you know exactly how much money is to be in each jar your have.

The habit of saving is more important than the amount saved. At the end of the day, whatever money saved is still yours to keep and spend. Having implemented on this method for close to 8 months, I personally find this method effective and will continue to stick to it. The amount i saved using this method probably equates to the amount i would have saved my entire life.

Oh, if there are others ways out there, feel free to share with me. :)

52 Week Money Challenge - Great Way To Start Saving

The concept of the 52 week money challenge is simple. Just follow the chart and set aside the same amount as the number of the week during the year. There will always be 52 weeks in a year, therefore in week 1, set aside $1, week 2 set aside $2. Just keep adding a dollar every week and at the end of the year, you will be $1378 richer! 

A friend of mine introduced this concept of the 52 week money challenge to me. I thought to myself "Yes i will do it!" I will put the money in and start to save every week in office. 

Therefore i decided to print out this chart and stick to the wall beside my desk. The next step was to look at the chart, scroll through to week 18, it says $171 then go to my online banking account, transfer this amount to my OCBC 360 savings account. Ok set! Done! Next week is week 19, so i will just require to transfer $19. 

As some wise men said. "It's not about how much you save, it's about cultivating the habit."

You can download the challenge chart here.. 

Update 2016

It is increasingly challenging to find small change of the odd dollar to continue with this saving. Therefore, to save the hassle of looking for the exact amount of change to be deposited, i have set up a recurring transfer of $26.50 every week, which would add up to the amount of $1,378 at the end of the year as well. 

52 Weeks Reducing Challenge

The 52 weeks reducing challenge is simply the reverse of the original 52 weeks challenge. For this challenge, we start with the largest amount of $52 for the first week and reduce that amount by $1 every week. We would still end up with $1,378 at the end of 52 weeks. I personally prefer this method as it is both visually and mentally inspiring. 

At the end of just 4 weeks, i would already have saved up $202. As the amount to save gets reduced each week, it would also seem to be easier to complete. Click here to download this saving chart.   

52 Weeks Automated Challenge

The 52 weeks challenge to save exact amounts each week is in itself a challenging challenge. Imagine you have a couple of $10 and $50 dollar notes in your wallet and you are suppose to save $47 this week, you probably have $3 too much or $2 too little. Therefore, to save the hassle of looking for the exact amount of change to be deposited, we can set up a recurring transfer of $26.50 every week with our bank to do the work for us. This would add up to the amount of $1,378 at the end of the year as well. 

The best part about this? Automation! The biggest problem many of us face is forgetting to save or not remembering to save. With a recurring transfer set up, we can ensure that the saving will definitely take place. Of course, just remember to ensure you have money in your bank. :)

Click here to download this saving chart.