How To Seize Control of Your Finances With the Six Jars Financial Management System

Unless you’ve been living under a rock.

Core inflation in Singapore has soared to 3.6 per cent year on year (y-o-y) in May 2022. This is the highest it’s been in 13 years!

If you are worried about rising inflation in Singapore and want to get a handle on your finances, you’ve come to the right place!

Check out the Six Jars Financial Management System.

Why six jars?

Here’s what you need to know!

TL;DR: Using the Six Jars Financial Management System to Better Allocate Your Finances

What is the Six Jars Financial Management System?

The Six Jars Financial Management System was taught by T. Harv Eker in his Millionaire Mind Intensive course and part of his book Secrets of the Millionaire Mind.

This system is designed as an effective way to help users achieve financial freedom.

How it works is that your income is split into six different parts, hence the six other jars.

Depending on how you prefer to do it, you can use actual jars or biscuit tins or portion out the money before putting it into your bank accounts.

Even while you have a tiny income to work with, it is important to build the habit.

As your salary grows, so would the amount you put into the jars, and for all you know, you might end up sitting on a nice pile of cash to let you live comfortably in the future!

Let’s move on to what each of the jars stands for:

Jar Number One: Necessities

Look for the bare necessities, The simple bare necessities~

You can forget any other jars, but you cannot forget about this specific jar.

Think of all your monthly expenses, you need money for housing, you need money to eat, you need to pay for your electricity bills, your transportation etc.

Make sure you allocate 55% of your income to this jar.

Jar Number Two: Long-Term Savings For Spending

Wow! Vaccinated Travel Lanes (VTLs) are opening up! The new Chanel Handbag is on sale now!

We all have things that we like, some people love to travel, and some are passionate about the latest gadgets.

But all in all, it isn’t wise to just immediately pump a massive chunk of your income into those things.

That’s where this jar comes in. Just imagine saving up your allowance for that new toy when you were a kid!

You can allocate 10% of your income to this jar.

What if you’re a frugal person and prefer to save? You can still keep this jar for emergencies or in case of sudden medical expenses.

Jar Number Three: Play

“All work and no play makes Jack a dull boy.”

You just got your hard-earned salary, and it makes sense to treat yourself a little with it every month.

See that restaurant you always walk past or the food place that keeps popping up on your social media ads?

Perhaps you’ve got hobbies that require a bit of spending (i.e. Arts and Crafts, Prawning, Arcade Gaming, etc.)

Treat yourself a little, take your family out for a nice meal or hang out and have fun with your friends. This jar is all about having fun!

You can allocate 10% of your income to this jar.

Jar Number Four: Education

There is a Chinese saying that goes “活到老学到老”, which can be roughly translated to mean “It’s never too old to learn”.

Especially in a country as competitive as Singapore, we need to be on our toes. That’s probably why we have Government initiatives such as Skillsfuture to ensure that we are constantly learning and equipped with valuable skills for the labour market.

Other than investing and getting more wealth, one crucial thing we must invest in is ourselves!

This jar is dedicated to expenses incurred on our learning and growth, so be sure to spend on upgrading courses, coaching sessions, and self-improvement books.

You can allocate 10% of your income to this jar.

Jar Number Five: Financial Freedom Account

Who wants to worry about their expenses daily?

Everybody wants financial freedom, but few have yet to take their first steps towards it.

Here’s the thing about financial freedom, the earlier you start, the earlier you achieve it.

The money in this jar is for you to channel towards your investments, such as stocks, cryptocurrency or other forms of passive income which you have.

What are you waiting for? Start putting money into this jar right now!

You can allocate 10% of your income to this jar.

Jar Number Six: Give

Lastly, your last jar is all about giving back.

Pick your favourite charity, do your part for a great cause. By contributing to a good cause, you might even contribute to a bit of positivity in yourself!

As a matter of fact, when you make donations in Singapore, you might just find yourself eligible for a tax deduction. (But donate for a good cause larh, don’t just do it for a tax deduction)

You can allocate 5% of your income to this jar.

Closing Thoughts

Now that you know this trick to managing your finances, it’s time to start now!

Perhaps you’re still on a pretty low salary. We understand, you don’t have to follow the percentages closely when you’re just starting out, especially when your “Necessities” jar might be taking a majority of your income.

Just know that it’s okay even if you’re putting as low as a dollar into the jars. It helps to build the habit of managing your wealth! (Just don’t put too much into the “Play” jar)

If you find this method not suited to your liking, here’s another budgeting method that you can consider for your financial planning needs!

Good luck with managing your finances 😉

For more savings hacks, feel free to hop by our community and leave a question! Our friendly community members will be glad to share their tips and tricks to help you with your financial management journey.