In my first episode I said, that I want to try to make an holistic approach with this podcast. In this episode I talk about a system to organize your money. The canadian author and businessman T. Harv Eker developed a money jar system to manage the money your are spending. This really helps you to get an overview of your spendings and helps you to steer where you spent your money for. To sum it up the money jar system helps you handle your own income in a more sustainable way.
It is very easy to apply. You basically just split all of the money your earn each month in the following six jars:
1. Necessities (NEC): 55% of your income
This jar is for all of your everyday expenses: rent, food, gas, internet, bills, etc. Everything that in necessary for you to live
2. Long term saving for spending (LTSS) or Rainy day fund: 10% of your income
The money from this jar you use to fix some big things in your household that break (a “rainy” day) or the money you use for your next travels that you always wanted to do
3. Play account (PLAY): 10% of your income
Use ALL of this money each month for things that you enjoy. Go out for drinks with your friends, buy a video game, do a bungee jump, go to the movies, … Its up to you ho to spent it, just make sure to spent it ALL and have fun doing it.
4. Education (EDU): 10% of your income
Use this money to buy books, go to seminars, visit lectures, book coaching or mentoring. You never stop to learn, so you should always continue to educate yourself.
5. Financial Freedom Account (FFA): 10% of your income
You never spent the money in this account. T Harv Eker says that “This is for investing or anything that is going to make this portion of your money work for you toward passive income streams.” This could mean to invest the money in stocks, fonds, or other immaterial values that can create money for you.
As well you can use this account as a “money magnet”. Just put it aside and let the money attract more money. A lot of people really belief in that and I try it as well. Interests on the banks are low at the moment, but you can still just safe the money.
6. Giving account (GIVE): 5% of your income
Make sure that you spent 5% of your income to NGOs, people in need, your community, friends that need your help, foundations, our planet,…
I think that not enough people are doing it. Just because a lot of use were by chance born in a first world country doesnt give us the right to forget that other people live a way more difficult life. Our world community and our planet can really use our support and we should all be able to give 5% of our income away for that!
Thank you all so much!
Hacks and tips for an easy impact:
1. Look at what you are spending your money!
2. Analyze your spendings over a few months. If you know what consumes the most of your money it is easier to cut costs.
3. Donate 5% of your spendings!
Sources of this Episode:
Create an impact on others: Community
Be impacted: Newsletter
– I have the feeling that it is getting worse again with the “ähms” in this episode. I just have to learn to speak more fluently.