Thinking of her youth, Donna can recall many fond memories of time spent at her Grandparents farm. Donna would help her Grandmother with the annual fall ritual of making things like relishes and jams, and preserving them in jars for the winter months.
It took a lot of time and effort to preserve the various fruit, vegetables, relish, jams, and pickles. Many jars were needed to preserve the harvest from the growing season. Each jar was carefully labeled with the contents inside, and of course, the secret recipe for each preserve was kept safely hidden!
In a way, saving, managing, and preserving money is somewhat similar to how Grandma would preserve the many items from her garden. Putting money aside in various jars, or cans, or envelopes, or whatever is available to hold money, is a great way for anyone, at any income level, to establish saving habits.
Using visual aids, such as a money jar, may be especially helpful for parents looking for an effective way to demonstrate to their children how to set aside money for various goals. In one case, David was planning a trip to Boston with his family. The kids were involved with the planning of the trip and a “Boston Jar” was placed in plain view for the family to see. Each day, mom or dad, and sometimes even the kids, would place spare change into the jar. Within a few months, enough money was saved to pay for return airfare tickets for the whole family.
To some, the use of money jars may seem unnecessary; after all, with automation today, wouldn't it be easier to simply establish monthly transfers to various accounts using an automated pre-authorized method of saving? The short answer to this question is yes! Those that already use an automated method of saving often don't miss the money coming directly out of their bank account. However, for those that don't use preauthorized savings, then a money jar system may be the answer to help develop effective saving habits.
Part of establishing new habits is through repetition. If saving money has been a struggle for you, seeing your goals labeled on several jars sitting where you can see them daily is a great way to be reminded to set money aside in each jar. Even a few cents a day can add up over time.
T. Harv Eker, founder and master trainer of Peak Potentials based in Vancouver, teaches a form of money management using a simple jar system. Mr. Eker's explanation of his jar system is highly entertaining, and most memorable. Many people have written to Mr. Eker with testimonials describing how easy saving and managing money became once adopting his money jar system.
Even though you can probably imagine what we mean by using a money jar system, we have outlined below how you could label several jars for specific purposes. The labels shown are for illustration only. Label your money jars with whatever is appropriate for your situation.
Jar #1 Long-Term Goals Money in this jar could be for any number of reasons, such as; travel, saving towards a new vehicle, or accumulating money to pay down debt.
Jar #2 Education This could be for your children preparing for post secondary education, or it could be for you upgrading your skills. Some people dread going to work at a job they don't enjoy. Perhaps they have limited skills to work in a job they would truly love. Setting aside money to upgrade skills may help land that desired job!
Jar #3 Personal Use When was the last time you treated or pampered yourself…without feeling guilty? Setting funds aside for you to use any way you choose is a very good way to achieve balance in your life. Saving without ever spending is no recipe for happiness; however, spending without ever saving is a recipe for disaster.
Jar #4 Giving/Donating Some people donate anywhere from five to 10 percent of their monthly income to a worthy cause, and/or to their place of worship. How much should be placed in these jars each month? Many thoughts exist on how much money should be allocated. Some will be able to put larger sums into each jar, and others may only be able to put a few cents in each jar.
Every person's financial situation is unique, therefore, it may be hard to place set rules on how much money should go to various spots. If in doubt, remember to seek the guidance of a licensed financial advisor to help get you on track. Anyone could easily adopt a money jar system of saving…all it takes is action!
“Action may not always bring happiness; but there is no happiness without action!”- Benjamin Disraeli
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