Want to get out of debt? And have more money for the things you love?
Did I grab your attention? I bet I did, because these are the things we all want. Here’s the thing; you already have everything it takes to get out of debt AND have money for the things that bring you joy. And I bet you, you weren’t even aware.
Here is the deal: You either manage your money or your money manages you. Simple as that. So let us talk about Money Management this month.
For about two years now I have managed my money using a jar system that T. Harv Eker teaches in his best-selling book “The Secrets of the Millionaire Mind” (grab your copy on amazon) and his three day ‘Millionaire Mind Intensive’ seminar. In case you are not familiar with that system, let me fill you in because it is life-changing (and not in an overly American kind of way but really).
The idea is to split your money (after tax) into different jars (or accounts) and then only use the money for a specific purpose:
55-60% of your money goes towards necessities (rent, bills, travel etc.). Tip on the side here: If 60% of your income do not cover your necessities, it is time to simplify! Do you really need THAT phone, THAT car, live in THAT area? You get the idea. Be critical about what is using up your money and ask yourself how you could simplify. Simplification happens to be my favourite topic of all times, so if you ever wanted to talk about that, get in touch.
10% go into an account where you let the money accumulate for a while in order to spend it at a certain point. This could be for holidays, house extensions, or other big pricey projects. This jar is also used to pay off debt. If you have a lot of debt to pay off, split this account in two and dedicate 5% to long-term saving and 5% to paying the debt of.
10% of what you earn go straight into investments. What you invest in is completely up to you but this is your Financial Freedom Jar, so this is what will allow you to be financially free one day, so choose wisely. The options are endless; crypto currencies, Forex trading, property, business, stocks, etc. The really important bit about this jar; you’re only allowed to spend the interest you’ve generated, but never ever the invested amount!
10% are used for the ‘Education jar’. This money is dedicated to anything that makes you grow and develop as a person; audio books, trainings, seminars etc. Invest in yourself for ongoing personal growth and development.
10% go into your ‘Play Account’. Now this is a fun one! This is money that you can do with whatever makes you happy or feel good; spa treatments, cinema tickets, fancy night out - you are the boss! The best bit about this jar?? You HAVE to spend it every single month.
An optional jar is the ‘Give jar’ where 5% go into. This is money that you give to charitable causes and give back to the world. If you don’t have a jar for good causes, the 5% go into the necessities.
This sounds more complicated than it is. I encourage you to give it a go. And don’t worry too much about the exact percentages yet. It is all about creating the habit and getting into dividing your money. The use of the different jars is not set in stone. For some a haircut might be a necessities, for others it might be a case for the ‘Play’ jar. The same goes for new shoes, clothes, lunch with colleagues etc. It is your decision how you define it, but get into the habit. Try it for a month and let me know how you’re getting on.
We as a household of two have been using this system for almost two years now. We have 12 accounts between us which might seem exorbitant, but the truth is I have never felt more on top of my finances. When I want to buy the latest audio book of my favourite author, I know exactly which account to use. When I want to book a holiday, I know exactly where to take it out off without having to worry about my bills not being paid. My credit card debt is almost paid off and my investments are growing steadily.
Change is only annoying at the beginning. Once you are used to it, it is just bliss. Try it out! I dare you!