The Simple Wealth

I came across Stephen Martile’s post on his blog a few days ago and learned about T. Harv Eker’s Jars System, and then I found Achiever’s post on the same subject. When we went to book store and hang out there last weekend, I grabbed T.Harv Eker’s book, Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth, and read the section he talked about the Jars system. The idea is every time you get a paycheck, put them into different jars( bank accounts) as follows:

Financial Freedom account (FFA) 10% –Money in this account is for investing only, make withdrawal after you retire, and even then only withdraw the “eggs”.

Long Term Saving for Spending (LLSS) 10% –Money in this account is for things like traveling, down payment for a house, car, children’s education, etc.

Education (EDU) 10%–Money in this account is for books, seminars, events for the purpose of educating oneself.

Necessity (NEC) 55%–Money in this account is for fixed expenses, like mortgage, rent, food, utilities, phone, gasoline, insurance, etc.

Play 10%–Money in this account is to nurture one’s inner spirit, to balance the responsible, saving part of oneself. The idea is to blow 10% away every month for fun things, like ordering the finest wine with your dinner, pampering yourself with massage. By balancing saving for the future with playful spending, you attract more into your life.–Wow, Michael will love this.

Give 5%–Money in this account is for giving to people in need, donation to charitable organizations, etc.–We can start from giving to our parents, and grow and expand our generosity to the world.

I like the idea very much. I have been doing the financial foundation work, tracking income and expenses and cutting expenses for several months now, and have been feeling that I need to do something else but not sure what. I have been feeling that I need to invest but at the same time I feel currently we don’t have money to do anything else besides paying bills. When I learned about the jars system, I know this is just what I need. I talked to Michael about it briefly and he also liked the idea very much. I was surprised. I haven’t even mentioned about play account to him yet. Usually it’s hard to get him excited on the subject of finances.

ING Direct has been sending Michael $25 bonus check if he opens an account with them. I have been considering to do it but never did because I felt too much trouble to have many accounts. But now I feel that it simplifies our life to have many accounts using the Jars system. It doesn’t matter how many accounts you have now, if you don’t assign a special purpose and give money a name, it’s a mess, money only means paying bills. It doesn’t matter if you are able to put in the suggested percentage of money into each account now. Just set it up, open a few (online) accounts, buy a few jars and line them up somewhere in the house, seeing the jars will help to form the habit to separate money as T. Harv Eker said. We need to learn to manage our money now, not later, not when we have more money. That day may never come if we don’t manage our money now. The better we are at managing our money, the more money we will have.

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