6 jars of money management

"hey friend, i am interested to buy properties but i don't have money la..."

"It is a good suggestion, friend. Thank you. But where will i find the thousands of money as the deposit? i have a child to feed... "

"5K? errr.... 500 cannot ha? i need to repair my car la this month..."

These are reasons and excuses given to me when i open out my mouth, enticing my good friends around me to start doing property investment, or even to buy their first house for own stay.

i feel sad for them.. sad because our education systems that we spent at least 11 years or even for my case, 18 years teach NOTHING on money management.
In contrary, hypermarkets and tv advertisement teach us daily on where to spend our money. As the result, all our hard-earned money go to somewhere else's pocket and wealth.. but we still feel happy to do it.
The sad words i hear are when people says that, "we struggle to get the money.. so, lets enjoy it.. buy whatever you want".
or worst for muslims "ala.. duit bukan bawak ke mati.. simpan banyak2 buat apa..."

oh gosh!.. don't they think about their future? or their children's future?
even we do not bring our money to the grave, are you sure that you will go to your grave tomorrow so that you can spend it all today?

hm.. i am grateful that i am not too late to learn the concept of pay yourself first.
during my 2nd year of working, i am attracted to buy and read a book by Hajjah Ruhani that is "Cukup Wang Hati Tenang".
The book really opened my eyes to pay myself at least 10% of my salary to my own self. She also teach me on the power of saving and compounding.

I like to absorb good things on money management and alhamdulillah i able to practise it until today.
It really helps me in my property investment. without the money kept aside, surely i will give the same excuses every time somebody entice me to buy a good property.
I might end up buying nothing until now.

Early this month, i went to No Money Down Seminar by Michael Tan.
I got the chance to learn new concept of money management.. called as 6 Jars of money management.
Luckily, Milan Doshi wrote the same things in iProperty magazine.. so i have a revision article to referred to.

So, what is the 6 jars of money management?

This concept is when you consolidate your income and divide it into 6 jars or accounts. The 6 jars are as follows:

1) Financial Freedom Account or FFA
- this folows the principle of paying yourself first. Put aside at least 10% of your monthly income to be used as a seed money for your investment. Never withdraw the money for something else even if your car broke down in the middle of highway. No ATM card for this account, please.. This is solely for investment.
- amount to set aside: 10%

2) Long Terms Savings and Spendings or LTSS
- ha... this one, you put aside at least 10% of your money for big spending such as new car, holiday package, new full HD 42" LCD tv or maybe your expected baby's stuffs. This account follows the concept of delayed gratification. Hm.. new couch handbag falls under this account ya! also, your emergency fund also comes from this jars. For the car brake down case as above, you need to use this money to pay the workshops.
- amount to set aside: 10%

3) Education or EDU
- this money is for your self-development. Remember, you are from what you learn. Your mindset is the most important thing that leads your life journey. You can use this money to buy self-development books, go to seminars or even join a professional course of your choice that will upgrade you. People who are too stingy to spend money on books and seminars will end up stuck their feet at the same point. No mindset change, no strategies learnt and no progress.
- amount to set aside: 10%

4) Necessities or NEC
- haa.. this is for your living expense. Utility bills, rent, car instalment, milk and drypers for your baby.. and every necessity things for you and your family. Only 55% of the money should be used for these. If the amount is not enough, this means you cannot afford to buy something beyond this amount and you need to adjust your spending accordingly. Maybe you need to forget to buy a honda civic but only Saga BLM.
- amount to set aside: 55%

5) Play
- This is the money to treat yourself on your hard works. enjoy your favourite coffee time at a 5 star hotels, go for pedicure and manicure, spa, facial treatment, golf course or in my case, enjoying theatre shows at istana budaya with a front seat. Actually, this will teach your subconscious mind to act like a millionaire but up to the maximum budget. If you enjoy every single cents spent, you will eager to earn more so that you can enjoy more. The rule is, you must spend ALL of the money every month. You cannot carry it forward. even spouse cannot question on how you spend it. This is your own money for your own taste of life.
- amount to set aside: 10% or 5%

6) Give or GIV
- This is the money for someone else. give it to charity of your choice. Give hope to other persons to live happily. If you are a muslim, zakat can be calculated under this allocation. Not limited to less-fortunate people, you can give it to other earth occupants too such as endangered animal pr for greener earth. As for my case, i prefer one of them to be WWF as animal has a right to live on earth as us too..
- amount to set aside: 10% or 5%

According to these millionaires, every month they will do standing instruction to automatically distribute their income into 6 different bank accounts.
One bank account for one jar.
Thus, it is ensured that the proportion of money is distributed correctly and automatically all the time. Of course, different ATM card / debit card for LTSS, EDU, NEC, PLAY and GIV while no ATM card for FSS.

Friends, let us practise this money management strategy. It is the basic of millionaires mind.
It leads to balance of life too.
And you will find yourself not stucked in the same excuses as above anymore.
Personally, i like this concept as it is align with the concept of wasatiyyah and istiqamah in Islam.
Membazir amalan syaitan.
Sikit-sikit lama-lama jadi bukit.


6 ulasan:

Haruki berkata...

Yes I also learnt this at Millionaire Mind Intensive by T Harv Eker. Thanks for reminding us, Eun-Young.

Rohaniah Noor berkata...

haruki, i think t harv eker is the founder of the theory, rite?

pak wan berkata...

hmm thanks for sharing.. hmmm kena rearrange commitments sket la... tapi akan ku try juga :)

quicky berkata...

sharing is caring~
theoretically good...reality when u already have commitments..its hard..but can be manage..even using saga BLM =)

Rohaniah Noor berkata...

ojah, quicky, komitmen kita boleh susun semula. nak ke tak nak je.. tak percaya? azizi ali pernah bg satu contoh ada suami isteri yg jual kereta merc dier dan ganti dgn honda 2nd hand. duit jual kereta mereka gunakan utk buat deposit beli rumah utk investment.
taiko hartanah, nancy pulak jual rumah landed dia dan pindah ke apartment yg disewa. duit jual rumah buat sbg modal utk invest hartanah.
alhamdulillah sekarang mereka dpt lebih dr apa yg mereka pernah lepaskan dulu.
masalahnya, tak ramai sanggup buat.. tak ramai nak apply delayed gratification.. melengahkan kesenangan hari ni utk kesenangan masa depan.
nenek moyang kita dr dulu dah ajar, bersusah susah dahulu, bersenang senang kemudian..

Mohd Aslam berkata...

saya suka entry ni.. terbaik


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