The 6 Jar Wealth Management System

The 6 Jar Wealth Management System

Do you find yourself struggling with Money and living month to month off your paycheck? Or that you end up spending more than you make, only to find yourself deeper and deeper in debt?

“The habit of managing your money is more important than the amount.” T.Harv Eker

‘It’s a habit that needs to be inculcated’ says T.Harv Eker, the Author of books on money management and success like Secrets of the Millionaire Mind and SpeedWealth both of which eloquently put the reality of this concept into perspective.

So how can you manage your money better? Well, his method is simple and is called The 6 Jars Concept for Wealth Management

The idea of this system is simple: separate your income into 6 different jars/ accounts for specific purposes. You can also use physical jars, envelopes, drawers etc. And label them as you choose. The most important thing is to ensure you make regular deposits into these jars / accounts as follows:

Necessities (50%):

This jar/account is to manage your everyday expenses like food, rent, mortgage payments, utility bills, petrol, insurance, remittances etc. If you can’t cover all your necessities with 50% of your income, you need to do one (or both) of these things:

Simplify your life – figure out how you can spend less
Earn more – figure out how you can earn more

Financial Freedom (10%):

The Financial Freedom Jar /account is your ticket to financial freedom and financial stability. The money in this jar can only be used for investments and building passive income streams. You must never spend this money until you become financially free.

Deposit something into this daily, no matter how small the amount. The idea is to make financial management a priority and a daily habit towards your financial freedom.

Long Term Savings (10%):

10% of your income goes into the jar/ account called Long Term Savings (LTS) for bigger purchases down the line. The objective of this jar/ account is to save money for future expenses (e.g. a new car, a vacation, a new couch, gifts, repaying debts…).

Education (10%):

Successful people constantly invest in and grow themselves. The more knowledge and skills you acquire, the greater your earning capacity. This can be for personal or professional development like books, online courses, tickets to online courses, language apps etc. If you are a student, your tuition fees do not go out of the education jar but out of the necessity jar.

Play (10%):

The whole purpose of this jar/ account is to bring joy to yourself. It’s important to occasionally indulge yourself with a nice massage, some new clothes, a fancy dinner… To avoid overspending or under-spending, make sure you use up the money from this jar/ account at least every few months.

Give (10%):

The Money in this jar/ account is for charity. Use the money to do some good. Send it to a charity organization you respect or buy with it some food and cook food for the homeless. This is up to you but giving away part of your income also helps you to sub-consciously develop the wealth-mentality that you have more than enough to give away.

This is the principle and of course is just a guideline to help you get started. Depending on your financial capacity, you may adjust the percentages a bit. Even if you are currently in debt, you can start by managing each borrowed dollar well and this is all the reason to start implementing this system.

Here’s how you can get started