Everyone wants to save, but few have what they see as a simple, efficient method for doing so. The Jar System for money management is such a system, and one that can be applied relatively painlessly. The idea is to create six jars, either in reality or metaphorically, each with its own specific purpose. A small amount of your income goes into each of the jars, and that amount can be used for a purpose related to the jar in question. It is just a matter of setting up the jars and limiting spending based on those different containers.
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Saving For Necessities
The biggest jar is that of Necessity. Roughly 55% of your income should go straight to this account, and expect it to be the most dynamic. This account is for all of your normal outgoing funds, and should take care of rent, bills, and food. While the others are likely to gather at least a little dust between uses, this account will see quite a bit of use, and so it should be managed the most carefully. This just means that a certain amount of care should be applied to its care and maintenance, and that you should monitor it very carefully.
Keeping Money For A Rainy Day
You should also set aside 10% for financial freedom. This can represent dealing with student loans or mortgages. It can also be used to allow for loans that may be taken in the future, in order to make sure that you have enough to cover at least a few payments. You can also use it to invest, both stocks and bonds as well as through a bank or other financial institution. This account can also be used to cover retirement; you would be surprised how quickly even a few dollars a month can add up.
Keeping Money For Education
Another way to get ahead is through education, and so you should set aside 10% for educational purposes. This can be almost anything that allows to learn more tricks as well as give you a more rounded skillset. Obviously this includes higher education, but it can also include books, compact disks, even internet learning programs; this is is a wide umbrella that can cover a wide variety of educational purposes.
Don’t Forget Entertainment
You can also plan ahead for a little relaxation. The play jar is another 10%, and can be used to just relax and play. This can be used for movie rentals, eating out, or just about anything that allows you to relax and enjoy yourself. However, this jar is designed for short-term most frivolous pleasures; there is also a long-term savings jar, also 10%, for any purchases that are a little more expensive but still allow some pleasure, such as large-screen televisions, vacations, and get-aways, as well as for any kind of home improvement.
Help Others Too
This leaves a final 5%, which can be used for donations. This can be used for charitable giving as well as loans that you do not expect to see returned. This small fund allows you to contribute back to your community and do so without breaking the bank.
It should be observed that each jar covers a wide variety of different uses and there is even a lot of overlap. This gives you a certain amount of lassitude when it comes to dispersing the funds, but it also means that you should monitor their use in order to make sure that you are not spending too much; this system is supposed to help you save, after all. These are also guidelines, and can be shifted around as needed. All in all, the jar system for money management method should be able to help you save money over time, ultimately making your life a little more organized and give you money when you need it most.
If you are looking to more help with your money, you may also want to step things up and find a good money manager in your area.