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The Jar System
A SIMPLE & EFFECTIVE WAY OF ACCUMULATING YOUR WEALTHSince we are in the phase of talking about creating wealth, I would like to share my experience in learning from various sources. From Wealth Gurus to Financial Investors. Hence this topic can be confusing for some of you, be absurd to many of you and will work for some of you. One who can master this will be able to live a really wonderful financial life. In one of the seminars that I've attended called the "Millionaire Mindset", the trainer T-Harv Eker mentions that if you cannot handle $1, let's not talk about $1,000,000. So we have to begin with the smallest amount you have and learn to break it into different portions. This is a system which he invented called the Jar System.. 1) Financial Freedom Jar (10%) Before we go into the Jars, do you believe that God have already given us wealth beyond our imagination. Only we need to know how to extract it and maintain it. Hence we need to know about energy that flows with us and around us. The older generation will call it PETUA. When you do certain things, something will happen due to Karma or you manifesting it. Hence it is also not just to know this but to practise it diligently. What goes around comes around. When you treat money like rubbish you will get rubbish. If you treat money like treasures, it will bring you more treasures! It is just that! So right now let's talk in detail about the Jar System. The Jar system is a way of allocating your monthly income into separate accounts or Jars. Financial Freedom Jar (10%)
Regardless of situation 10% of your earnings needs to be allocated to it and you will find yourself never hungry for money. Based on my experience, if you do keep this jar, you will realise there's a certain form of energy flowing. This Jar will help you to keep in check with your situation and always be aware of incoming and outgoing money which we call CASHFLOW. Also from time to time, you will be tested. Tested to an extent that you want to take that money out for some expenses such as debts. For those who takes out the money from the jar, you will realise that you will forever be losing money or will be in debt. Like I mention earlier if you don't treat this seriously the Universe will not take you seriously too. So this is a jar which I would recommend not to touch at all except for putting money in. In Singapore, if you are employed you are very lucky because the Government has already allocated for you this. Even though they take more than 10%, this very much settled it but there is a trade off because you may end up paying for your house or education using CPF. In this case it doesn't work. Hence I would advice you to keep another Jar just for you to physically see it from day to day. Like I said, it sorts of vibrates energy out and it gives you that motivation to earn more money and save more money. The mistake I did and many others that attended the seminar was that we left it empty for months and when that happens you will realise that the flow of money coming to you does not stick. It means that your saving and spending patterns will be imbalanced, hence it will get very difficult when it comes to CRUNCH time. What do I mean by CRUNCH time? This is a situation many of us will face because there are times that we really need the CASH to pay off debts and so on and so on.. Hence allocate just 10% of your income into this and you'll see your money growing from day to day. Be Discipline. Long Term Savings Jar (10%)
Want to buy your LCD TV? Buy your Dream Car? Buy your Dream House? Go for that Family Holiday? All this requires a certain form of capital right? I would like to call this my Dream Account too..Without it its difficult to attain the things you want. I realise I tend to make excuses for not being able to travel because I’ve never really set aside money for it.. So my target is to travel the world by Jan 2011. So I need this account up badly!! Every single one of us have dreams right? To go for that holiday, to have that dream car and so on and so on. Set aside some money to start off a business or set that money to go for your holiday. Its up to you. Or best save the money for Haj or Umrah. Education Jar (10%)
I would advise to always divide this into two. They say if you don't keep learning, you can also be considered DEAD. If you do look around you do meet a lot of dead people even though they are alive because their minds just refuse to learn new things. Its very different when you meet people who always wants to learn compared to one who says he knows it all but in truth he knows nothing at all. So make sure we make it a purpose to get Education for Life. Technology evolves very fast these days. Example. 15 years ago, the Internet had begun to spread around the consumer market. Prior to that, it was only used in Military systems and so on but now, the Internet has evolved into working place, a place to socialise, a place to run businesses and so on. Who knows what's going to happen 10 years down the road. Hence if we do not invest in Education we will be in the losing end. So we need to set aside some cash for this purpose. Same also with out religious education. There is really no end to learning our Religion and our way of life, hence to improve ourselves spiritually we have to set aside some money in this.
Expense Jar (55%)
You are expected to max out this Jar every month. If you could save some why not? Yes since there's lots of savings on the first two jars. This allows you to really spend cos every one of us need to survive. That is why there is a huge percentage in this Jar. Most of the time you'll see it empty though. However said make sure your expenditure is not beyond 55%. Many Financial Experts say that it should not even be more than 50%. Well its up to you though.
Play Jar (10%) When was the last time you did go out with a BANG? Not often? This is the portion you have. Ooh yah your branded stuff comes from this category!! You must spend all this money every month and keep this jar empty every month! That's the rule. You see its not just about saving, this system also allows you to enjoy the money you earn so that your life can be more balance.. All work and No play makes you a DULL person. Give Jar (5%)
Then why do we need to give money away? My mentor Abang Abu always says this, "Have we ever paid for the air that we breathe? Have we ever paid God to keep our hearts pumping? Have we ever paid God for anything in this world?". As Muslims we need to pay this in the form of Zakat and donations. Islam teaches us to give away 2.5% in the form of Zakat. There are many types of Zakat. Zakat Fitrah to Zakat Harta - Personal / Business and so on. You can check MUIS website on this. www.Zakat.sg Where does the other 2.5% goes to? Well this is a small percentage to give to whom you really want to help. Its not compulsory though but I believe many bodies, organisation will need your support. Hence why not give away a little bit more of your income to help the orphans, your own charities and so on.. The list of organisations that needs help is really endless. Hence your support is needed. If you do have time, do volunteer work too. Now let's get Practical.How do you start? If you do have empty bottles or cans. You can start from there. Make sure the Cans or Bottles are clear bottles so you can see them. Next... Label them clearly Why must it be clear Jar? The effects are different. One totally blindsided you not letting you know how much you have an another will give absolute inspiration. So try that out. Next... Start with $1 Break that $1 into 10 cents, 10 cents, 10cents, 55 cents, 10 cents and 5 cents. Put them into those jars. Now everytime you earn any amount of money, break that money into small change and repeat the steps. Keep doing this for at least 90 days. You will be surprise how much money you will have when you have the discipline and the right attitude towards managing money. If you are a parent Teach your kids as young as 4 years old. Instead of having 6 jars. Start with 3 Jars. Savings, Spending & Giving. If they pick up this habit insyallah they are potential millionaires and givers in the future. For Adults I know some of you will still have doubts that this will work for you. If you don't do it, of course it wont work on you and for those who believe it and practise it, you will see your life turning around. Can we use bank accounts to instead of Jars? Yes. In the Millionaire Mind Seminar, someone even suggested opening up to 6 bank accounts just to follow the system. Having one account for the FFA to be the type of account where you cannot draw out the money easily. Hence making it hard for them to draw out the money in the first place. Can we shift the percentages? From this point on its up to you to modify to suit your own personality and spending habits. Some of you may need to shift the percentages. Example Financial Freedom Jar (10%) In the above example, I shifted the percentage for Long Term Savings as at this age I need to save more for the deposit of my houses, cars, my wedding and travel. Hence more savings are required and hence I need to lower down my expenses. So this system is not rigid, its up to you to adjust according to your conditions and age group. You can shift the percentages up to your needs. However do not touch the Financial Freedom Percentage. Give Jar definitely you cannot go below 2.5% ( for Zakat ). The Jar Sheet.I have created a spreadsheet using MS Excel to help you calculate the Jar calculations and allow you to see your overall amount you have in each jars. Please watch this video on how to use it. :)
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This is the most important jar of all the jars in this system. This is the money kept with you till the day that you end your life. You are not allowed to use it and it needs to be passed on from generations to generations. In Islamic context this Jar will be Faraidh to your future generations. 