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Introducing the world's simplest Money Management Method
The main different between rich people and poor people is simply because rich people are REALLY VERY VERY VERY GOOD AT MONEY MANAGEMENT SKILLS.
T Harv Eker recommends the JARS SYSTEM.... Wat just 6 STUPID JARS can get you out of your financial mess? I was skeptical and still am skeptical.. but I guess it is the discipline that he is teaching ... start NOW !! I have started but I do admit that I DID NOT FOLLOW THROUGH... I need to seriously give myself a slap in the face for that.... SLAP !! OUCH !! WAKE UP MAN !!
So here it goes.... You need to manage your money by splitting your net income after tax into 6 saving accounts / physical jars (if you have to pay the tax by yourself, create one more account and put it 10-20% for your tax, then split the remaining money into the 6 accounts)... Even if you are living off your savings or in Retirement.. You still use the JARS !!
Presenting the 6 JARS.. Drumroll......Remember to CONTRIBUTE TO ALL JARS EVERY MONTH... :
* The % for each account is flexible, you can adjust it accordingly.
1. Financial Freedom Account (FFA) JAR - 10%
This is your GOLDEN GOOSE. GO ahead give ya goose a name ... I call mine GOLDY the Golden Goose.... alright I do admit its cheesy sounding ... but who cares.. its my goose and I love my goose... LOVE YOUR GOOSE.. TAKE CARE OF IT NOW AND IT WILL TAKE CARE OF U LATER !! Sounds logical right?
This is YOUR PASSPORT TO FINANCIAL FREEDOM !! The money that you put into this account is used for investments and building your passive income streams. How to do that??? We will talk about it in the upcoming blog postings.. Your passive income revenue goes into the FFA !! Throw your pocket change into the FFA at the end of every day !!
So the REAL PURPOSE OF THE FFA ACCOUNT is to build a huge amount of money (to feed the goose till its a big fat golden goose) so that it can be used to create passive business income (small geese) along the way. You CAN NEVER EVER SPEND MONEY IN YOUR FFA ACCOUNT (never ever kill the goose), not even when you're retire.
The money in the FFA is used to build your legacy, when you pass this account to your children, tell them this "NEVER SPEND THE GOOSE, but they can you can enjoy that the SMALL GEESE is generating."
Example: If your expense is $100k a year, you can be financially free if you have $1m in this account that gives you 10% interest/year.
2. Long Term Saving for Spending Account (LTSS) JAR - 10%
This is the money that you save for the BIG TICKET ITEMS (nice to have purchases) or used as a secondary means to pay down your debt. You start saving for your car, house, our child education, etc. you can have more than 1 LTSS account (of total 10%) with 1 purpose for each account. Here is a tip: DELAY PURCHASING YOUR BIG TICKET ITEMS UTIL YOU HAVE THE MONEY... DO NOT PURCHASE ON CREDIT !! POSTPONE TILL ALL YOUR DEBT IS CLEARED BEFORE YOU START SPENDING AGAIN... Remember to leave at least $1 in the jar at all times... never let it be $0... :)
3. Education Account (EDU) JAR - 10%
Money in this account is for YOUR EDUCATION - your personal or professional development. T Harv Eker said "If you are not growing, you are dying". Ben Franklin said this "If you think education is expensive, try ignorance". In a fast changing world, education is the way to keep abreast of what is happening.
YOU ARE YOUR MOST VALUBLE ASSET !!
You can use money in this EDU JAR to purchase Books, Audio, Videos, CD's, Courses, Seminars or anything that has educational value.
YOUR CHILD Should have his/her own set of EDUCATION JAR ... This is for YOUR OWN EDUCATION !!
4. Necessity Account (NEC) JAR - 55%
This is for your daily expenses and it does includes bills as well. Basically it covers your necessities like rent, food, bills, utilities, mortgage, personal grooming, and ONLY NECESSARY CLOTHINGS... THese are things in life that you cannot do without..
5. Play Account (PLAY) JAR - 10%
All work and no play makes Jack a dull boy!! Admit it .. we all need play to keep ourself sane or keeping us from being insane... You get my point and Yes you guess it ... the PLAY ACCOUNT is next! This is the best .. you know why? You get to spend it every month on YOURSELF... thats PAMPERING YASELF !! Yes you heard me right.. YOU HAVE TO SPEND ALL THE MONEY EVERY MONTH ON YOURSELF !! How cool is that man??
OR if you need to save for cash for something bigger, you can only keep it for maximum 3 months and then SPEND IT. You could purchase an expensive bottle of wine at dinner, get a massage or go on a weekend getaway...
PLAY TO YOUR HEART'S CONTENT... The idea here is for you to taste and experience a LITTLE LUXURY LIFESTYLE that you never experienced on before. It is for you to enjoy the fruits of your labour on a continuous basis...
6. Give Account (GIVE) - 5% (Minimum) JAR
What's the use of being a millionaire if you don't give back to society? It is society that make you what you are today!
Yes Give money !! What is 5% of your income when you see the smiles that it bring... yes true MONEY CAN'T REALLY BUY HAPPINESS.. but at least you help a portion of the society .. at least you touch some people's life with your valuable gift of money... The GIVE ACCOUNT is for giving to those in need or for donation. You can give your money to a charity or even someone that you know personally who is in need.
Why GIVE MONEY THAT IS HARD EARNED?
1. It's the law of universe. It says "give and you shall receive"
2. How do you feel to be able to give money to a person you know who really needs the money?
3. When you give, you're sending a sign of abundance to the Universe, that you have plenty of everything. This will magnetically attract more abundance to you. Another law of universe: like attract like.
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