T. Harv Eker’s JARS Money Management System
By Achiever on Dec 1, 2007 in Financial Success, Millionaire Mind Intensive, Millionaire Mindset, T. Harv Eker
During the 1st Millionaire Mind Intensive seminar in Singapore, Harv Eker introduced to people from all over Asia about the world’s simplest, easiest and most effective money management system.
Harv suggested that everyone can use the JARS system to better manage one’s money. 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. And of course, there are many other distinctions that set the rich, poor and middle class people apart. I will go into that on my later blog post as I intend to discuss more about the JARS money management system in this post.
The most important part of money managing is separating your income into different accounts for specific purposes. I will outline the various accounts for the JARS system as well as their % breakdown of how one should divide their money to manage below:
Financial Freedom Account (FFA) = 10%
Long Term Savings For Spending (LTSS) = 10%
Education (EDUC) = 10%
Necessities (NEC) =55%
Play = 10%
Give = 5%
Anyone can start using this JARS method of managing their money even though if you think you do not have a lot of money to manage. The key is to develop a habit of managing your money, but not how much money you have available for you to manage. One must get into the habit of managing their own money, and you can start with as low as $1 to begin using this system.
Here are how the JARS system works:
Financial Freedom Account (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.
In summary, the time to spend your FFA capital is NEVER! When you stop working, you get to spend the eggs but never the goose!
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 major expenditure such as savings for your children’s education, buying a house for yourself, keeping aside contingency funds.
Education (10%) - Put 10% 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!”
Necessities (55%) - Put 55% 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, clothings, eating, driving, travelling, hair etc. If you cannot survive on 55%, 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 55% 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.”
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.
Give (5%) - Put 5% into your Give account whenever you receive money, such as your salary. You can use the money for donations to charities, use it to help someone in need. Giving is important. If you choose to give 10%, take the extra 5% from your NEC and change the % allocated for NEC from 55% to 50%.
In my opinion, this is really a great Money Management System as it covers most aspects, if not all, on how one usually spend their money. It is so amazing simple, yet profound, method of better managing your money, regardless of how much money you already have! It can work for people who never save their $, or for people who needs to give to feel a sense of contribution to others/society, for those that need to learn and grow through learning, for anyone who just needs a little more help in managing their money.
Hi there,
I attended the T. Harv Eker Millionaire Mind Intensive and am really elated that I went for the event. I believe you will agree with me that life is going to be better than ever especially after applying what we have learned from Harv and Robert.
Eugene | Dec 2, 2007 | Reply
I loved the simplicity of the jars system too. In fact, it is so simple that I have gotten my kids to do their own version of the jars system (without the NEC jar) and put 20% of all their money in each jar.
Shafir Ahmad | Dec 3, 2007 | Reply
I’ve used the “Jars” system for over a year now and it has worked AWESOME for me. Previously I would spend a lot of money.. not necessarily wasting it, but I’d never know where things went. With this method it does two things; 1) reins in your spending a bit (without it being painful) and 2) balances outflows that balance short-term impulses with longer term.
Like Harv says: “I highly, highly, highly, HIGHLY, HIGHLY recommend this system!”
And thank you for posting the details. I was unsure of what to do with the FFA gains, but now it’s much clearer.
RacerX | Feb 6, 2008 | Reply
You are sharing in very detail and easy to understand. Hmm.. one small question, what is JARS stand for?
I know this is the money mgmt system that I will definitely introduce to my Baby Moon.. and also the Book..
Moon Loh | Jan 29, 2009 | Reply
Hi Moon
It’s called the JARS system because when you set aside 6 different accounts to divide your money, you can put them into 6 different physical container jars to hold your money. But of course, you can have the option to set up 6 different bank accounts to keep your money. It is really up to you.
For example, my FFA, LTSS are in designated bank accounts because the sum tend to be bigger in amount and putting in bank allow me to earn some interest. My PLAY account is in a container jar at home because I need to blow it every month, so it is more convenient for me to have them as cash in hand.
Hope my explanation helps a bit.
Donald
Donald | Jan 29, 2009 | Reply
Hi and thank you very much for this great blog. VERY INFORMATIVE!
Since you are a fan of Harv, I thought that you would like to know about his new movie which just came out!
It’s called The Compass.
http://www.thecompass.tv
Check it out!
John Spencer Ellis | Jan 29, 2009 | Reply
ohhh.. now i know why it’s called JARS system.. then I should buy few jars for my Baby Moon.. haha..
Moon Loh | Jan 30, 2009 | Reply
yes this seems simple, but i’m a bit thick. I am still learning the system. Which accounts are savings and which are chequings accounts? Where can i get this info? thank you
conan | Feb 16, 2009 | Reply
Hi Conan
Actually there are no hard and fast rules that your JARS have to be real bank accounts. I know some people just put them into physical container JARS when they are starting out.
When your sums get bigger, it will be a great idea to put them into bank accounts to earn some interest to help your money grower faster than putting it at home without any interest earned.
If you ask me, I guess my NEC account will be a current/checking account because I will be using it often to settle bills or payments. Likewise it can be the same for your other JARS accounts such as GIVE or PLAY account since you are going to spend it quite frequently and having a checking account will be convenient for some people.
So I believe it is really up to you.
For FFA account, since we are never going to spend the $ in it anyway, I believe it is a great idea to put into financial instruments that give you SAFE, higher interest returns than normal bank accounts, for example, fixed deposits account (or any other instruments that gives you good safe returns).
Hope the above information helps. Remember: The key is to save, manage and grow your money.
Achiever | Feb 17, 2009 | Reply
Thank you Achiever. I only came across Harv last week. It makes sense to me and I want to get started a soon as possible. I still have a lot to learn. I remember him also saying that the TD- “travel gold visa” was the one credit card he recommended. I have been at RBC for a long time. I asked about the card there and they compared it to the RBC- “avion” At a glance it seemed ok. RBC also has “e-savings” for high interest, online banking. Does anyone have any recommendations as to whats best? Also wondering about a financial adviser, if I should use the RBC employees or to pay elsewhere. thank you
conan | Feb 17, 2009 | Reply
Hi Conan
I will not be able to answer your question about which credit card or checking account is better because I believe I do not reside in the same country as you. I am from Singapore.
This is my suggestion based on my own experiences:
You can research and check out the banks in your local areas and see which bank offers the best options for you (if you are repaying debts with interest, one obvious thing to do is to find or transfer your debts to one with a lower interest rate so that you can save more on the interest and use the extra money for better use).
Another tip that you can consider is to choose a banking facility that suits your lifestyle. For my case, I don’t like going to the bank, so choosing a banking facility that:
1. allows internet banking (is convenient to me, saves time and money)
2. has ATM or cash deposits machines which is near my residence (I can save on time and transport fees doing cash withdrawal or deposits with the bank)
3. Offers me discounts with my usual necessities shopping (e.g. groceries) or rewards points which I will redeem for shopping vouchers or even food vouchers.
So the key is this:
If you can find the right banking facility that gives you the maximum benefits, you will realise that your money can get you more things without spending more money.
As for choosing a financial adviser, look for a “results-based” financial adviser who is producing good results for both himself and all his clients. You of course do not want to have a financial adviser which had lost big money himself with his own investments (or his clients) and then trying to help you invest to make you profits.
Hope the above information can help you a bit.
Achiever | Feb 18, 2009 | Reply
thank you!!!
conan | Feb 19, 2009 | Reply
Can anyone recommend an easy to use software program to manage my money?
conan | Feb 20, 2009 | Reply
I have listened to a lot of Tony and Harv, but I was wondering where I can connect with other and if anyone had any good recommendations for good books or programs on how to manage and make money. Thank you
Conan | Feb 24, 2009 | Reply
Hello
I’ve read the Millionare Mind book, and JARS system (as you call it or is called) made a lot of sense. I’m sort of trying to understand it from the other end. Since necessities (NEC) are something that we all have to pay, it seemed like a good idea to sum up all family bills and other expenditures and start from there. I’m going to REALLY round up numbers here, so please don’t take this as hard core math but just an illustration. If I add up all our living costs they come about $2500. That is the money I really need all the rest is optional (sort of). If I want to have $2500 for NEC, then we have to earn around $4500 month. We stash up $900 for savings (FFA, LTSS), and we have almost $900 for play and education and something over $200 for giving. So is it just me and my poverty thinking that $1100 for fun, education and giving away every month is quite a lot of money, and some of it could be spent on necessities. Or if one would adjust the three mentioned accounts in favor for necessities account what would be long term effect.
I thank everybody in advance. This has been really bugging me lately and any kind of insight would really help.
Truhillo | Feb 26, 2009 | Reply
Hi Conan
I think Microsoft Excel is good enough for you to use to manage your money if you know how to use it. If not, do your research online, you should be able to find many such programs.
If you are looking for like-minded people, you can go to this Facebook group “The Official Peak Potentials Training Page” at: http://www.facebook.com/profile.php?id=612831929&ref=name#/pages/The-Official-Peak-Potentials-Training-Page/29260796419?ref=ts
Just do a search, you can find many interest groups on Facebook.
If you are looking for books recommendations, you can go to one of Harv’s web site at :
http://www.richlifeclub.com
Donald | Feb 27, 2009 | Reply
Hi Truhillo,
There is a reason why Harv designed the JARS system the way it is.
And I hope I have understand your question correctly and here’s my inputs:
For the PLAY jar, the money is for you to pamper yourself, for you to feel good about yourself and for having money to indulge. Some people have a lot of money after working very hard but they are still not happy, probably they have to nurture their spirit by pampering themselves to feel better.
For the EDUC jar, it is for you to educate yourself, improve yourself, develop yourself. If you are interested to excel in any areas of your life, you need to learn and model from the best of the best. And the EDUC funds can help you achieve that.
For the GIVE jar, I believe it is for those who want to give. Some people just do not feel good if they do not give away their money. Furthermore, when you know that you are making a difference in someone’s else life with your money, don’t you feel really good about yourself?
Harv always tell his students that when you have shown the universal that you can manage your money, more money will come to you. The purpose of the JARS system is really to get us into the habits of managing our money.
This world is in abundance. When you give away your money, it does not mean that you will have lesser money forever. Somehow the universal will return more to you.
Maybe I can share some of my experiences below…
When I started the JARS money management system about 2 years ago, I was heavier in debt.
And what I did was this:
I contribute lesser % to my GIVE, EDUC and PLAY funds, instead I put the extra money into my LTSS funds in order to repay my debts faster.
On top of that, I also ensure that I will always put money into my FFA funds because this fund is my money magnet, so I must use it to attract as much money as possible.
Now I am much better off, so I ‘reverted’ back to the % that Harv has recommended.
The Financial Freedom Formula is actually very simple:
Working Income + Savings + Investments + Passive Income + Simplify = Financial Freedom
Important: If a person is not earning enough to keep up with his desired lifestyle, then he MUST “simplify” his lifestyle. If not, earning more money also will not get him anywhere.
To live the desired lifestyle that you want, the right way is to use your passive income streams to pay off your lifestyle. Putting more money into your NEC to live a better quality of life can be a dangerous thing to do. What happens if you lost your working income, does it mean you will have problems coping with your daily living expenses?
Use your FFA money only to acquire passive income streams, for investments, not for spending.
I hope I have shed some light on what is bugging you.
If not, do write back, I will try my best to help.
If you can, find a chance to attend Harv’s Millionaire Mind Intensive. It has forever changed the way I look at money…
Donald | Feb 27, 2009 | Reply
Donald I can’t thank you enough. You’ve explained really nicely. In general the system is clear but when you start it you have a lot of “what ifs”, “buts” and “maybes”. In time you gain and share experience and you realize things that weren’t so clear before. If JARS system did anything for me it finally made me realize where my money is going, what are my real needs and expenses. It really makes you think about your decisions about how where and when. I’ve also realized that my problem is really more about reorganizing my thinking. As they say: “… and the rest will follow”.
Thanks again.
Truhillo | Feb 27, 2009 | Reply
Thank you Donald. Done and done. I feel like I’m wasting my time going to school and working.I just want to focus on making money, so I don’t have to work…work only because I want to work. I only found Harv about three weeks ago and already I get to go to a seminar of his in May. Free of cost. Good, or good??? ; )
Conan | Mar 5, 2009 | Reply
would I consider RRSP’s as FFA?
Conan | Mar 7, 2009 | Reply
Does anyone think that I can use the jars system with my online banking, or with Quicken? thanks
ty | Mar 13, 2009 | Reply
this goes back to the $4500 a month getting you $1100 for fun, education and giving. The same as you have to eat and you have to save money, YOU HAVE TO (if you listen to Harv, he gets excited) YOU - HAVE TO! learn in order to grow and the 10% for fun means YOU HAVE TO enjoy the fruits of your labor. The idea is that you want to learn and grow and do more. That you don’t want to spend 7 days a week working, you want to go out and really, really, enjoy yourself
I listened to Harv and it’s more than just putting money in the jars. You need to start spending 20% on yourself (fun and learning), you need put aside 20% to save and invest, and the big thing I believe is that when you can “give” it mentally means you have an abundance, and living in abundance you get more
and it doesn’t have to be monthly, it could be a yearly figure so $450 for play a month adds up to $5,400 a year which is a nice trip OR combine it with your “education” account and spend a month in another country learning how other people live and enjoying yourself
There’s so many people that are stuck living paycheck to paycheck with huge debts and they grow old and realize they were at the same job doing the same thing for 40 years, they never took a vacation and ended up with nothing saved. It just depends on who you want to be in a year and in 10 years
The big thing for me (which you also get from Kiyosaki) is getting your passive income from your FFA investments to cover your desired lifestyle (all the jars). AND your passive income needs to be twice you NEC
dan | Mar 26, 2009 | Reply
and for software Quicken is probably the best and they have a free online tool (maybe $2-$3 month), Microsoft has a totally free “Office Accounting Express” (meant more for small business) and Grisbi is free and runs on everything
and for free online personal accounting there’s Wesabe, Geezeo and Mint
you can google them to get more info, try them out and see which you like
- good luck
dan | Mar 26, 2009 | Reply
Thank you Dan
Conan | Mar 27, 2009 | Reply
I am having a heck of a time just trying to install “jabp” on my phone. I was looking for a free program to start with that I could use on nsync on my computer and phone and also be able to have updates from the bank. I have a telus 8130 blackberry pearl and use RBC. If anyone has some advice, It would be much appreciated.
ty | Mar 27, 2009 | Reply
Hey everyone, I found this site.Wondering if anyone uses it and or if it’s legit? thanks……
http://www.prosperityjars.com/eker.html
conan | Apr 3, 2009 | Reply
Hi Conan
What’s RRSP?
Also, http://www.prosperityjars.com/eker.html does look good but I am not very sure if it’s legit or not…
Donald | Apr 5, 2009 | Reply
Thanks Donald, rrsp is registered retirement savings plan.The government suggested it to people a long time ago everybody jumped in, but isn’t what it was said to be. From what I understand. Still don’t know where I should be putting my money right now. I am wondering if I get a tax break or some benefit to giving my money???If it is for the sole purpose of feeling good about giving ,then I would rather give to someone close that I know personally. thank you
Conan ccarlick@hotmail.com
Conan | Apr 24, 2009 | Reply
Hi Donald, Conan, and everyone,
Yes, http://www.prosperityjars.com/eker.html is indeed “legit!
My wife Cynthia and I created the Prosperity Jars with Harv to compliment his Jars system, and had him record the CDs documenting it as well.
We also created the Jar Power software, which is a cool multimedia version which tracks your money according to the Jars system.
The actual URL is http://www.ProsperityJarsMoneySystem.com
We think it’s an awesome system and have gotten great results with it. (see our story on the sales letter)
To Your Prosperity,
Howard Tiano
Howard Tiano | Apr 26, 2009 | Reply