Roads To Riches

Posted by admin on January 20th, 2009 in Uncategorized

About 3 years ago I read this phenomenal book entitled “Secrets of the Millionaire Mind” by T. Harv Eker. In the book, T. Harv Eker outline a simple and easy to use money management system that anyone can implement and use. The best part about this system is: IT ACTUALLY WORKS!

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The Jar System

The most important part of this money managing system is to separate your income into different accounts (jars) for specific purposes. Below are a list of the different jars and the percentage of your income that should be applied to each of the jars.

List of Jars

Thith (10%)

Play (10%)

Financial Freedom (10%)

Education (5%)

Give (5%)

Necessities (50%)

LTSS (Long Term Savings for Spending) (10%)

Thith  (10%) - Put 10% into your Thith account whenever you receive money, such as your salary. This money is donated to your church or any organization that speads the word or God.

Play  (10%) - Put 10% into your Play account whenever you receive money, such as your salary. You are supposed to spend this money every month to pamper yourself. The key is to BLOW this Play money away every month so that you will feel good about having money and spending it! You should feel guilt-free when you spend this money every single month. Maybe you go for massages once every month, now you can use this money to really pamper yourself by going twice, thrice or as much as you want. Or you can try ordering champagne during dinner at a restaurant if you do not usually do. Or buy yourself a new gadget. Anything outrageous that you can do to pamper yourself and makes you feel really good. You are recommended to BLOW this money every month. However, if you need to save up for things such as short trips getaways that require a little more money, you can accumulate them up to a few months, say a quarter, before you use them.

Financial Freedom (10%) - Put 10% into your FFA whenever you receive money, such as your salary. You must NEVER, NEVER spend the money that you put inside your FFA account. Any money inside the FFA account can only be used to purchase or acquire passive income streams to grow your money. You may spend the interest acquired from the FFA if you choose to, although it is recommended that you do not. Keep the interest inside the FFA to grow your capital and interest faster. Think of your FFA as the golden mother goose that lays you golden eggs, if you spend the money inside the FFA, it is akin to killing your mother goose that will bring you golden eggs (your riches). Instead, keep the baby geese (FFA’s interest) that the mother goose is giving you, and you can grow more baby geese (your wealth) even faster. As you may already get it, the idea is to create a golden goose! You may prefer to think of the FFA as a legacy that you can leave behind for your future generations. If you are one who believes in the law of attraction, this FFA is actually your money magnet. Keep putting more money into your FFA and attract more $$$ into your life! Put $$$ into your FFA account everyday if you can, even if it is just a penny.

Education (5%) - Put 5% into your EDUC whenever you receive money, such as your salary. You can use the EDUC funds for your self-education, for examples, books, seminars and events etc. Everyone needs to learn, especially in this changing world. Grow your comfort zone through learning and doing. If you are not growing, you are dying!Take this quote from Ben Franklin:

“If you think education is expensive, try ignorance!”

Give (5%) - Put 5% into your Give account whenever you receive money, such as your salary. You can use this money for birthdays and Christmas gifts , etc.You can also use the money for donations to charities, use it to help someone in need.  Giving is important.

Necessities (50%) - Put 50% into your NEC whenever you receive money, such as your salary. You should use the funds inside your Necessities account to settle all your essential bills such as phone bills, electricity, clothing, eating, driving, traveling, hair etc. If you cannot survive on 50%, simplify your lifestyle. Instead of driving a car, perhaps you can take public transport, or drive a Honda instead of a BMW. Buy Converse jeans instead of Armani. There are people who cannot live on 50% NEC when they started the JARS system but over time, these same group of people are able to simplify their lives and live on 50% or lesser!

When your usual needs for instant gratification kicks in, think this:

“Wealthy people think Long term. Poor people think Short term.”

Long Term Savings For Spending (10%) - Put 10% into your LTSS whenever you receive money, such as your salary. The money inside LTSS can be used for large expenditure such as savings for your children’s education, buying a house for yourself, buying a car etc.

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The key between rich and poor or middle class people is their ability to manage their money. Rich people are excellent money managers and poor or middle class people are less-savvy when it comes to managing their money. So learn to manage your money today!