Mar 232013

Money JarSince I’ve been implementing this nifty little system, I’ve noticed a BIG change in my finances.

I started with small changes first and found that even *those* made a big difference.

So that’s why I’m putting this in a blog post here today.

I think more people need to know about this system and find a way to modify it to fit their needs.

Before I explain this system, first let me share what I used to do.

I had a Spending Account (and of course, I would spend most if not all of the money in that).

I also had a Savings Account and a Business Account, which I would contribute to occasionally.

And I usually felt that I didn’t have enough money to contribute to either on a regular basis.

So most of the time, I ended up feeling depleted.

And I’d already heard variations of this system before.

I remember hearing once on a TV show about a family that divided up their cash into different envelopes. They had an envelope for groceries, one for paying bills, one for eating out, one for going to the movies, etc.

I thought it sounded like a good idea in theory, but I didn’t think that would ever work for me. The idea of withdrawing all that cash, putting it into so many specific envelopes, and then sticking to that rigid of a system sounded exhausting and forced.

So not my thing.

But then my Mom lent me this book recently:  5 Wealth Secrets 96% of Us Don’t Know by Craig Hill. It’s written from a Christian perspective based on Biblical teachings (the teachings are actually an ancient Judaic practice).

If you decide to read the book and have different spiritual beliefs, please don’t let that get in the way. I think the advice is really solid, regardless of spiritual perspective.

So the ancient Judaic tradition I read about is to divide your cash into 5 Jars.

The 5 Jars are: Spending, Saving, Investing, Charity, and Tithing

The idea is that most of your money goes into the Spending jar, but a predetermined amount (usually 10%) goes into each of the other 4 jars for every chunk of money you get–no matter the size.

The best thing about this is that you end up creating a feeling of abundance rather than depletion no matter how much money you are working with.

In his book, Craig Hill uses the example of a child receiving $10 as an allowance. Instead of spending it, the savvy child would put 10% ($1) into each of the 4 categories and then spend the rest to treat herself.

(FYI, since math can be frustrating: find 10% of any number by multiplying it by .10)

The beauty of this version of the system is that the categories are broad enough to give you freedom of use (as opposed to those envelopes for every possible thing you can think of to spend money on) and that you can use multiple bank accounts and view them on line (rather than withdrawing cash if you don’t want to).

So here’s my take on the 5 Jars:

1) Spending: A jar/account that is just for spending–pretty self-explanatory, right?

That’s the one we’re all most familiar with, and most people only have this one type of jar/account.

2) Saving: I recommend putting 10% of any amount of money you receive in a savings account.

The first move I made to implement this system was to start adding 10% to my Savings and Business accounts. I was surprised to see how much of a difference that made even after only doing it once!

I had some story in my mind about how I couldn’t afford to do this regularly, because I needed that money for my expenses. It turns out that we’ll find ways to spend whatever is available in “Spending.”

In addition to implementing this system, I also realized that I could maximize interest by turning the account into a Money Market account rather than just a regular old savings account–so I did that too.

3) Investing: My investing account is my business account, which I already had set up. Contributing 10% to it regularly is giving me a sense of empowerment–knowing that I have funds building towards my next live event for instance, is an awesome feeling!

Of course, if you don’t have a business, you can still benefit from contributing to an Investing jar/account. You could start putting money aside for education, buying a property, buying stock, or starting a business–whatever is likely to give you a return on your investment in the long term.

4) Charity: I really love this one! I love doing collections for local animal shelters, participating in the AIDS walk, supporting local museums, supporting friends making films and starting their own businesses, giving money to mental health organizations and cancer research–I could go on and on.

But all too often, I would feel that I couldn’t afford to give. The idea of putting aside money for a Charity jar/account is such a good feeling! It feels abundant and empowering to know that you have money to give. And it makes your work more meaningful, knowing that a portion of your money is going to a greater good.

5) Tithing: Tithing means giving a portion of your money to a spiritual community–it could be a Church, Synagogue, or a donation to a meditation group or shamanic journey.

In my opinion, this jar/account only makes sense if you’re part of a spiritual community that you are regularly involved with. Otherwise, the money for an occasional contribution can reasonably come from the Charity jar/account.

Difficulties Anyone?

Okay this clearly doesn’t work if you routinely move money around to fund your spending account.

And be warned,  I’ve also noticed it’s tempting to justify things like “Well this dress is an investment…”

And maybe it is…but these jars/accounts are only as real as we make them. We need to make solid distinctions between them and take them seriously for the system to truly work.

It’s helpful to make it as difficult as possible to move money around. The last time I went to the bank, I was pitched a “virtual wallet” scenario where I could combine all of my accounts into one,  so I could withdraw from any of them anytime–bad idea!

Multiple cards for withdrawing from multiple accounts are not so helpful either.  I actually love the fact that it’s hard to access my on line banking on my smart phone–I only use my desk top computer to manage my money, and I have more self-control there.

Final Tip: Even though I never want to get as specific as that family that used all those envelopes, it did seem like a good time to start loading up a Starbucks card.

I’ve made shameless peace with the fact that I enjoy my daily trip to Starbucks most days, so why not have a specific account for it?

The card gives you freebies after buying so many drinks and you get a free drink on your birthday (which is more than I would get if I kept paying with my checking card). Plus the money is separated out from my Spending account, so I can see how much I have available not including my tea expenses. It also makes me feel more justified in spending from a pre-loaded amount.

I only mention this so that maybe you can think of a way you can separate out some expenses in order to save more money and create more peace of mind.

Leave a comment below and share any money management tips you have!

If you’d like to give this nifty system a try, remember that I saw a significant difference after just contributing 10% to Savings and Investing one time. So experiment by starting small–it’s still a big move!

My biggest takeaway: It’s crazy to think that the money is already there for the important things–it’s just a matter of managing what you have.

  22 Responses to “My Nifty Money Management System: 5 Jars”

  1. [...] about using the power of intuition to make life-changing decisions and overcoming blocks with money and [...]

  2. I love doing the money jar thing. I’ve been doing it for three years now, and getting good on my money management and not spending the ‘money I don’t have’! Plus, I’m actually saving! Although mine is a bit different though. I have ‘Debt/Bills’ jar, ‘save’ jar, ‘give’ jar, ‘play’ jar and ‘retirement’ jar. I recently added the retirement jar since I work on my own and don’t have a retirement plan. I am thinking on adding an ‘emergency’ jar this year…incase for the ‘just incase’ situations..

    Great read!

  3. Christina, thank you for writing this post! I recently read The Five Wealth Secrets 96% of Us Don’t Know and something finally clicked for me. I have read dozens of wealth and personal finance books but we continued putting our money into 1 or 2 jars and that was definitely NOT working. I especially got a lot our of the “multipliers” chapter as it applies to my business. Brilliant! Anyway, can’t recommend it highly enough, thanks for being a multiplier!

    • Hi Jessica, yes having multiple jars does creating a feeling of abundance, doesn’t it? I’m so glad this has been helpful!


  4. Great system you have there. I also agree to always pay yourself first. My husband and I tried several system and one on them was the 5 envelop system. I remember it working really well but eventually doing all of our finances online makes it so practical.

    • Hi Nathalie,

      I’m glad to hear that the envelope system does work! I totally agree that using an on line system is so much easier though–I’m with you there :)


  5. Christina, I am sending this to my son who is graduating from college in May and needs to develop his own budgeting system – some great tips here!

  6. I have heard of that system before and it is a great idea- have you adapted it well to mainly having your accounts online?
    Thanks for sharing

  7. I love the 5 jar idea. We did the envelopes for a while and it worked well, for us, but the problem would come when we’d forget to withdraw the cash and use the debit card. We finally just got out of the habit.

    Really like the idea of the charity account to support friends in their fun raising and to have moeny put aside for charity runs I take part in.

    Today’s payday, just make have to log on the my bank and move some money it to a couple accounts.

    • Hi Jean,

      It’s really cool to hear that the envelope method is helpful too. I think I shied away from it for the same reason, though–having to withdraw the cash is an extra step. I find it easier to keep everything on line and just take cash out of my “spending” account if I need it.

      Glad you love the idea of the charity account–I find it so helpful! :)


  8. Wow, awesome system! :) I already have an account for saving and I donate monthly to a charity but I love how comprehensive this is. And I def. need to start investing. Thanks!

    • Hey Roxi,

      It’s awesome that you’re already doing some of these things. I’ve found that every additional step I’ve implemented has made a huge difference–best of luck with investing! :)


  9. Hi Christina:

    Very good idea. But I am practicing it in a different way. I prepare a budget for a month and implement it accordingly.

    • Hi Nanu,

      That sounds like a great plan–thank you for sharing! This is definitely not the *only* money management system, but it’s been my favorite so far. I believe it’s most important to find what works the best for you. It’s great that you have a system that works! :)


  10. Is it OK to have a “spoil yourself rotten” jar? I suppose that would fall under spending…

  11. Great advice! I remember a friend (who happens to work at a bank) telling me “pay yourself first”, with every paycheck. I love that advice and I’m trying. Your tips from that book seem like a great idea. Definitely worth a try.

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