6 jars system of money management


     Life of many people gets stuck between 9 to 6 working hours. But even after working hard, they cannot be able to stop worrying about money.

     Usually these kinds of worries about money getting varied based on person to person.

  1.    Some try to make months meet and fails(newbie).
  2.    Some cannot be able to plan their vacations properly or unplanned vacations.
  3.    Some kept growing their debts bigger and bigger which leads to allocating higher part of income in paying interest for their debts.
  4.    Some cannot be able to buy things they want either in the middle or end of the month.

     If you ask them about their financial stress, their answer would be in either of this  “I’m not earning a lot of money” or “my expenses are too high”

      Their problems would not get solved even if their paycheck get doubled, because their actual problem lies in the lack of money management. 

       There is some special kind of people who failed to live by thinking about the future. This kind of people will not spend a single penny to make themselves happy. They always sacrifice their present in order to save money in safe saving instruments like the Fixed deposit or recurring deposit by thinking themselves they are very smart.

       Initially, they may happy with their saving, but after some years either they will get frustrated with their way of living and started to vanish their savings by spending or will become a prey to emergency situations it may be expenditure on marriage or medical emergency etc.

       We cannot be able to blame them directly. Because our education systems thought us how to work hard and pay bills and pay taxes on time.No one thought us about finance in our school days.

       Even our parents failed to discuss or teach us how to play with money correctly.

       In order to get away from all those problems, one should know how to handle his money. It is also termed as money Management.

What is Money management?

     Money management is the process of budgeting, saving, investing and spending.

“If you don’t know how to manage your money, it will become the root cause of all other problems”

     In other words, Money management is the art of architecting flow of cash in one’s life. If we are smart enough to architecting the cash flow, it will put money into your pocket else it will take money from your pocket.



     Recently I come to know about 6 jars system of money management by T. Harv Eker’s. This helped me in setting up the plan for my needs.

    If you want to learn about this “6 jar system of money management” you can read his book Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth.

The 6 jar system of money management

     The 6 jar system of money management tells us to split our needs into 6 high-level categories of money management and also tells us how much percentage we need to allocate in each of those categories.

     So what are these categories and what percentage of your income goes into them?

1 Necessity (NEC)     55%
2 Play (PLY)     10%
3 Financial Freedom (FFA)     10%
4 Education (EDU)     10%
5 Long-term saving for spending (LTS)     10%
6 Give (GIV)     5%

 T. Harv Eker’s use 6 jars to indicate 6 high-level categories of money management.

Note: You can use accounts or jars to represent each category.

Necessity jar or Necessity account (NEC – 55%):

     This account is to manage our day to day expenses. This jar takes the higher percentage of allocation from your income than other jars. Basically, it includes anything that you need to live, the necessities.

      Your real financial intelligence will be addressed by how you are handling this jar.

     This jar will be the game changer of your financial life. You should reduce the leak from this jar by consistently tracking the expenses of this jar.

    “Rich treat each dollar as a money seed that can grow into a money tree”

        Rich people know how to set up the budget and stick towards it. They also frequently track their expenses and take actions towards unwanted expenses, repeat the process. 

      Poor on the other hand spent their earnings completely or grow their debt bigger and bigger. 

     This jar includes expenses like rent, mortgage, utilities, bills, taxes, food, clothes, insurance etc.

Necessity jar rule 

     Try to reduce your unnecessary spendings and add some value to other jars like you can allocate 5% more in Financial Freedom jar which helps you to achieve your financial freedom quickly or you can add it in LTSS jar.

Play account  or Play jar (PLY – 10%):

      Play jar is for fun. You are completely free to do whatever you want to do, no one will question you.

      It may be a bottle of wine or small road trip or one day stay in a star hotel. Spend on whatever makes you happy.

      Play jar motivates you to stick with your plans.

      For the saver, this helps them to spend some money on themselves which motivates them to stick to the process.

      For the spender, this will limit their expenses and shows them a step towards wealth creation process.

Play jar Rule

     There is no rule other than your happiness.you should blow this jar. If you are not able to accomplish your wish by using one month value of this jar, You can wait until 3 months if your need exceeds more than 3 months value of this jar then use LTS jar. 

Warning: should not hold a single penny from this jar.

Financial freedom account or Financial freedom jar (FFA – 10%)

     Financial freedom jar helps you to increase your net worth by 10% every year. You should use this money to work for yourself. You have to invest this money in asset classes like

  1. Real estate
  2. Business 
  3. Passive income 
  4. Stock investing (not trading) etc.

      You have to take some risk based on your risk profile. If you can, you have to increase money in this jar by reducing your expenses from necessity jar.

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”

       Try to start as early as possible because it makes you exponentially grow your wealth. If you can please check how early investment makes you rich.

      Financial freedom will come to you only if you are generating passive income(s) greater than your need/necessity.

      Passive income(PI) > Basic need (NSC Jar)

Financial freedom jar Rule

     You have to invest this money in passive income producing sources like peer to peer lending, stock market investment or create your own business.

Education jar or Education account (EDU -10% )

“Rich people get educated; Poor people get entertained — QUEK Kai Hock”

     This jar is to sharpen your saw. Use this jar to improve your knowledge and personal growth. Successful people strongly believing in learning consistently.

      You are the most valuable asset to yourself.so you have to improve yourself by reading books, watching some inspirational movies, attending seminars, buying courses, CDS etc.

       Start to learn from today. I recommend reading  “The 7 habits of highly effective people”  by R. Stephen Covey. In this book, the author shared simple examples which help us to change perspective in looking at things and solving problems that anyone can face during there day to day lives.

Education jar rule

     Don’t spend this money. keep this money only to buy books, courses etc. 

Long-term saving for spending  account or LTS jar (LTS – 10%)

      Money at this jar is used to go for bigger purchases like buying the car, abroad trips, children’s education, emergency fund, paying off debts etc.

      If you spend your entire money on your new car, holiday or luxury you will experience major discomfort. So, you have to be very careful in allocating funds to this category. 

     Warning: Initial focus should be on fulfilling the emergency needs.

     Keep multiple accounts for splitting this category fund into different subcategories which helps you to stick towards your expenses.

     For instance, let us assume that you have an account for your Pattaya trip. This account will help you to stick with your budget till the end of the trip. So all other plans will not get disturbed.

LTS jar rule

       Have a perfect plan and necessary accounts before using this jar. 

Give account or Give jar ( GIV – 5% )

     Give jar is to give your money to your family or friends birthday occasion or you can plan a charity visit yearly once to donate food and clothes with your friends.

      If you would like to contribute 10% (instead of 5%) to your income to the GIVE jar, take the additional 5% from the NEC jar. You can also reduce this to 2%. It’s all up to you. But think it as a mandatory one. 

     You can also give away your time as opposed to giving away money.

Give jar rule

     This jar is not optional make some contribution by helping others.


       The 6 jar system of money management will not make you rich. The percentage of the split will not fit for all because every one way of thinking and lifestyle is different. But I am sure that with the information from 6 jar system of money management you will get an overall view of what you need to have in your mind while budgeting and how to split your money in the process of wealth creation.


Those who don’t manage their money will always work for those who do.”    —   Dave Ramsey


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