Regular readers of this blog would know how much i stress on tracking your money. Although i know the importance of this habit, i cannot deny that a lot of people find this process very boring. Hence today i am going to tel you a simple way to keep a budget. This has been followed and advised by a lot of financial experts.
For those who find the process of budgeting boring, i strongly recommend the JARS system. What is a JARS system? JARS are nothing but your plastic jars. From now on you are going to allot different jars for different purposes and allot money in it.All that you would need to do every month is, as soon as you get your paycheck, divide the money according to the JARS system strategy and put it into them.
Types of JARS:
1) The Necessity Jar : This includes the amount that is going to spent regularly for utilities, grocery, mortgage payment , clothing etc. Allot 55% of your income to this account and see to it that it doesn’t increase. If your debt rate is high, you could consider saving on other items like your utilities, grocery , clothing etc. In situations of dire need this percentage could go up.
2) The Financial Independence Jar: You are going to allot 10% of your monthly income to this jar to ensure that every month you are slowly building up your investment, emergency funds and savings.
3) Saving for Spending Jar: This is to save for a purpose. You might want to take a trip to Europe or buy an Iphone, to fulfill all those dreams, put aside 10% of your income.
4) The Learning Jar: Put aside 10% of your income to enrich your life by learning. Be it your educational CDs, books or even your salsa class, you have to spend only from what you have alloted to this jar.
5) The Play Jar: This would be everyone’s favorite. Use this one to entertain yourself with a movie or just by shopping for your favorite brand lipstick. Allot 10% of your income to this jar.
6) Use the remaining 5% to enrich the lives of the needy. Be it an orphanage, old age home or an organization saving lepers, donate to your favorite charity.
Doesn’t this sound easy? 6 jars and your budgeting is complete. Try and let me know how it worked.
