The ’’jar method’’ is one of the most effective ways to manage your personal and family budget. All you need to do is just divide the money you’re planning to spend in near future into six jars. Each jar will be responsible for one sphere of your life. If you follow this method, you’ll never spend more money than you plan to again.
We at Liked Video would like to share this simple way that will help you organize your income and spend it wisely.
Jar 1: basic necessities (55% of your budget)
Money in this jar is intended for covering daily expenses and paying bills. It will also cover your costs for rent, transport, taxes, and food.
Jar 2: entertainment (10% of your budget)
You can spend this part of your budget for purchases that you don’t buy regularly. For example, you can buy a bottle of expensive wine or go somewhere for vacation. Spend this money as you wish!
Jar 3: long-term savings (10% of your budget)
This is a guarantee for your future financial independence. You’ll use money from this jar for investing and creating passive income sources. You shouldn’t spend these savings until you get complete financial freedom. And even in this case, it’s better to spend only the interest that you receive from these savings and not the savings itself.
Jar 4: education (10% of your budget)
Money in this jar is intended to further your education and personal growth. Investing is a great way of allocating money, and you are the most valuable asset. Always keep that in mind. Use this money to buy books, educational CDs, or courses — it will pay off later.
Jar 5: private reserves (10% of your budget)
These savings can be used for large purchases. Spend this money when you want to buy a flat screen TV, an annual gym membership, or a car. This is your reserve fund that you should constantly replenish.
Jar 6: charity and gifts (5% of your budget)
Spend this money when you need to buy gifts for birthdays, weddings, and other celebrations. You can also donate this money to cancer aid associations, animal shelters, or just people who need help.
