Let's face it, learning and growing demands being willing and able to manage your money. I have tried numerous types of budgets over the years and usually ended up scrapping the whole idea because when I wrote down the numbers I realized it was impossible to live on what I was making! Today I'm going to give you a budgeting format that is easy. I mean it!
It's called the jar system and it was developed by T. Harv. Eker. There are 6 (maybe 7 if you are self-employed) areas to utilize.
1) Financial Freedom Account (FFA)
2) Long Term Savings Account (LTSS)
3) Giving (GIVE)
4) Education (EDUC)
5) Play (my favorite) (PLAY)
6) Necessities (NEC)
1) The FFA is what Eker calls your "golden goose." This account NEVER EVER gets spent EVER. This account is what begins building your empire :) and the only thing you spend are the golden eggs your goose lays. You can spend on investment opportunities. For example, my husband and I are currently investing in a new business. Our FFA money is currently going to that new business. By investing we are increasing this account.
2) The LTSS is an account we use to save for 6-12 months for things we want or need. Marcel and I have two of these accounts, one for fun savings, and one for needs that come up. One account will go toward our trip abroad this year, the other for house repairs, new tires, etc.
3) The GIVE account is pretty clear...if you want to receive, learn to give. For those of you who are Christians, we are PROMISED abundance when we act in faith in this area.
4) The EDUC will cover the things you need to learn as you grow your business or expand your skill-set in any way. Something that all wealthy people have in common is that they are life long learners.
5) The PLAY account is to be blown in whatever way you wish every single month. Yes, that is what it means; shopping with no guilt, spa days, books, massages, whatever floats your boat. When we constrict and hoard we start looking at life that way. We get resentful and often that leads to over spending or erratic choices. You must learn to live and receive while you're building your skills.
6) The NEC account is what you use to pay your basic bills; electricity, rent, car pmt. etc.
You're probably wondering how to split all of this up...well here you go.
Taxes - 20% of whatever you bring home if you're self-employed
FFA - 10%
LTSS - 10% (If you have two accounts it is 5% in each account)
GIVE - 10%
PLAY - 10%
NEC - 50%
Let's say you are self employed and bring home $1000.00, here's how it will break down numerically.
Taxes - $200.00
Now you have $800.00 left to split up amongst your jar system
FFA - $80.00
LTSS - $80.00
GIVE - $80.00
PLAY - $80.00
EDUC - $80.00
NEC - $400.00
Now for those of you who exclaim that there is no way you can pay bills on 50% of your income, do not worry. You can use this system simply by setting up 6 jars in your room or 6 accounts at your bank. I know a woman who started using the system by splitting up a dollar in her jars. She had very little to live on but as she practiced good money management her income and resources increased. The important piece is that you PRACTICE! If you want to manage millions, learn to manage the smaller amount that you have right now.
Marcel and I have also made some concessions in order to get our NEC account at 50% of our take home. We've given up our cable television (today is day 1 and so far I have not run out of the house to the movie theater!), I got a less expensive car, and I will be shopping for cheaper car insurance.
On a final note, this budgeting stuff is not for the faint of heart. Many of us have guilt or shame around money and se we tend to spend it when we get it, ignore it, hoard it, etc. Any of those habits will be challenged by this new practice, so DON'T TRY TO DO IT ALONE! Have a friend, coach, counselor, partner, etc. who is committed to learning this with you and above all, connect with God who has ultimate power in your life and is the source of discipline and growth. Remember God sent Jesus so you can have abundant life...life to the full! Learning these skills is a part of building abundance so know you are supported and loved as you practice.
Please feel free to ask questions or get feedback from us as well. Now go forth and conquer!
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