CREATE A MONEY MANAGEMENT SYSTEM
Now that we have covered step number 1 in my 5 step process of The Stepping Stones of Wealth system (Know your Numbers), here in part 2 we will cover step number 2… Create a Money
What I am going to cover here is not a dreaded budget, but a complete, comprehensive system for managing your money. In fact it is has been called the easiest and simplest method for managing your money in the world!
THE JAR SYSTEM
The Jar System is the brain child of T. Harv Ecker and I was introduced to it while attending his live seminar – The Millionaire Mind Intensive and it was reinforced to me when I completed the Associates Degree with Catch Fire University.
The basic premise of this system is to divide your money up into 6 separate accounts (or jars) with each individual account having it’s own specific purpose.
The account name’s and percentages are:
- FFA 10% – Financial Freedom account
- LTSS 10% – Long term saving and spending
- EDU 10% – Education account
- NEC 55% – Necessities account
- PLAY 10% – Play account
- GIVE 5% – Give account
The idea is to divide all the money you receive into these separate accounts with these percentages as soon as you get paid or receive it, however the system is flexible and even if you only have a dollar – manage that dollar because until you can manage the money that you have you will not receive any more!
We will now go through each account separately and explain their purpose.
FFA 10% – Financial Freedom account
Your Financial Freedom account (FFA) is set up for you to create Financial Freedom!
The idea is to set aside 10% of everything that you earn into this account and this money will be used to invest in assets such as investment properties, investments such as quality shares or stocks or setting up businesses that will provide you with passive income streams.
The key to this is that the money you put into this account is NEVER EVER SPENT! EVER!
Just use it to buy assets, investments and to create passive income streams.
It is the Goose that will lay the Golden Eggs, that will lead to true Financial Freedom!
LTSS 10% – Long term savings and spending
The LTSS account is used to save up for the toys and experiences that come for the financially free.
Things such as a new car, the dream home, holidays, a new pool, a massive entertainment system or a designer shirt or dress, whatever you can dream of this account is it!
It can also be used to pay down debt and separate accounts can be set up for specific purposes.
EDU 10% – Education account
This could arguably be the most important of all, as Tony Robbins says “If you are not growing you are dying”
This account is to be used for your ongoing financial education, whether it be University or college fees, books, seminars, courses or personal coaching, investing in your ongoing education is one of the most important things you can ever do and is one of my key stepping stones on My OWN Road To Financial Freedom!
I have personally spent $10,000’s on my financial education and I have realised that the more that I learn, that there is so much more to know!
NEC 55% – Necessities account
The Necessities account is for all your everyday bills such your home mortgage, car payments, power bills, groceries, NECESSARY clothing etc. The idea is to get these everyday expenses down to 55% of your income.
PLAY 10% – Play account
This could also be called the blow account!
The idea is that every month you take this money and SPEND IT!!
Spend it or blow it on something that will make you feel rich and lift your spirits such as a night out, an expensive bottle of wine, a night in a 5 star resort, a 2 hour massage.
Whatever will make you feel fantastic.
You see, if everything is save save save , you will just sabotage yourself!
You need to do something to satisfy your spirit, so go out and enjoy it!
GIVE 5% – Give account
The secret to living is giving and gratitude, so find a cause you believe in and give something back!
You can either contribute monthly or save it up for one huge sum! Also if you want to give 10% just take it from your LTSS or your NEC account.
So give this money management system a go.
As I said before the percentages are flexible. The key is to start somewhere and manage what money you have at the moment and build up to your ideal percentages as you go.
As you start to manage your money better and then as your income grows, especially if you take my advice and start up an online business, your NEC account percentage will decrease and your FFA percentage will go up and all bases of your finances will be covered!
Then you will truly be on Your Road To Financial Freedom!
You can learn more about starting an online business here
As an added bonus I have included a free Money Management Template Here: Money Management System – SSOW
I personally use this Money Management system and have found it invaluable on My OWN Road To Financial Freedom and I am sure you will too!
If you have any questions or comments feel free to leave them below, I will be happy to help.
To your success,
John W. Newman
Lifestyle Entrepreneur and Your Online Business Mentor
Dream It… Believe It… Then Achieve It!
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