I’m going to share with you the Money Management System that changed the way I thought about money forever. This system was the very beginning of my 2 year, Day Job FREE, stretch. It’s called “The Jar System.” I learned about “The Jar System” from T. Harv Eker in Secrets of the Millionaire Mind. If you haven’t read this book by the way READ THE BOOK.
Before we start I’d love for you to grab a pen, some paper and pull up your online bank statement. if you don’t bank online then grab your most recent statement. Circle the top 5-10 things you spend money on per month.
Be honest with yourself. How much of it do you REALLY need right now? The things you don’t need, put exes by. The one thing you don’t NEED but really LOVE go ahead and circle it. You can use your PLAY account for this one. {I’ll explain what a “Play Account” is in just a sec.} The rest, severely cut down or cut it out. I’ll give you an example… Cut out eating out, drinking, partying, recreational drugs. Cut down on rent, gas, grocery bill. Use your “Play Account” for Netflix. Make sense?
Let’s begin…
When you get your paycheck you should put it all towards rent and expenses right? WRONG! Yet most people make exactly this mistake. Instead use “The Jar System” and split your money up like so…
10% FINANCIAL FREEDOM JAR
This is the most important jar. You will not touch this money unless you are investing it. This does not mean investing in your friend’s band or your girlfriend’s t-shirt company. You can use your “Play Account” for that. This money is your nest egg. As it builds, ideally you will get to the point where you are living off of the percentage returns on this money. You NEVER TOUCH THIS MONEY! When you die, put it in your will that anyone who comes after you is never to touch this money, only the money it creates. For now, starting off with an IRA, IRA Roth {if you are under 35}, a 401K or any other tax free account.
Never Spend This Money. Only Invest it in opportunities that will make you more money.
10% EDUCATION
ie: that new pottery class you heard about
You think education is expensive? Try ignorance. (Who said that by the way? It’s not mine) And I’m not talking about college specifically either. Actually I only went to one semester of college then I got cast in a B film and couldn’t attend my classes. Well, there was no “couldn’t” about it. I “wouldn’t.” Wow, what a trade off! Back to the point. You are going to use this money to expand your core of competence. This is “Mastering Your Craft” money. The better you are at your craft the more your income should reflect that.
*This is not your child’s education, this is YOURS. You really want to be able to pay for your child’s education? Master your craft and start making more money.
10% LONG TERM SAVINGS
ie: that trip to Berlin you and your friends keep saying you’ll go on
If you want to use this money to pay off debt you can. But you can also split it up 5% and 5%. Pay off debt AND use the other 5% to save up for something special. A car, a vacation, a tattoo whatever gets your boat floating.
Spend this money every 6 months to 1 year
{5-10%} GIVE
ie: San Francisco Women Against Rape
What is the point of making money if you don’t contribute? This is the point! In fact if you are reading this and you only want to make money so you can sit on it and wait for it to hatch, I’d prefer it if you didn’t make any money at all. The world is a huge place that needs some huge healing. Be a part of that process. Contribute:) And pick a cause that YOU stand for. Don’t let anyone guilt you into anything.
I say 5-10% because as you start making more money you can increase it to 10%. If you are broke and you are very stubborn about giving at least 10% is it OK if we explore something here? Could this be why you’re broke? Are you giving too much of yourself? You can’t pour water from an empty cup. Be patient, fill your glass and you will do the world a greater service in doing so.
Spend this money every month
10% PLAY!
ie: front row tickets to a Prince Concert
YAY for PLAY! That one thing you circled that you know you don’t need but just have to have goes here. For the first month at least. This Jar had me tripping in the beginning. I just didn’t know what to do with myself. This Jar is for pampering yourself! It’s your reward for sticking to your guns and sticking to this system. Massages, first class airfare, pedicures, fancy restaurants, whatever you can think of! The only rule is you have to blow all of this money by the end of the month. How’s that for the most fabulous rule ever?
Spend this money every month
50-55% EXPENSES
This is the meat and potatoes right here. Rent, car payment, groceries, bills, etc. Now as you can see I put 50-55% If you want 55% guess where that extra 5% comes from? That’s right your GIVE Jar! This is for all of you who are still thinking about scraping pennies to give away everything you don’t have! If you can’t live off of 50% only you have to take from the Give Jar. If you have to get creative with your giving, give your time. I am a volunteer for San Francisco Women Against Rape. I was on the hotline for a year. I learned a lot about myself and life in general volunteering there. The training was a very life changing experience for me, so give your time. It’ll give back to you as well I promise.
Note: If you are paying a lot of money per month for health insurance or credit cards you NEED to check this service out.
Now some of you are thinking, “Chantelle, how the hell do you expect me to live off of 55% of my money? have you lost your mind?”
Actually I have and I have no desire to find it either, but that’s another issue. But this is why we went over CUTTING DOWN first. Greg Habstritt says “Do What Others Won’t for 3-5 Years, And Then You Can Do What Others Can’t Do For the Rest of Your Life.” For me this meant turning away from my “friends” at the time. I stopped drinking, I stopped eating out. I was surprised at how much money this saved me. I’m a firm believer that when you take one step outside of your comfort zone the Universe will bend over backwards for you. Show a little discipline and see what comes of it;)
You will most likely use up your Expenses money every month. When you find you are not using it all up then start putting the rest into your FFA and your Give Jar.
If you absolutely 100% under no circumstances can afford to do this right now please don’t be discouraged. Start with using 10% of your money for your FFA {money you never touch} and give your time. Definitely cut down. And focus on making more money. The Laid Off Artist’s Survival Guide will help you out with that immediately.
If you have any questions about the jar system you can visit… jarshelp.com
Or shoot me an email at lessworkmoreart@gmail.com
And YES you should actually get JARS and do this. I have eight bank accounts {3 for my FFA} and this is how I do it. Seriously! I put my account balance in my Jars on a piece of paper. I made my Jars with fabric paint, a sharpie and plastic cups. I make a nice fun art project out of it and if you’ll have me as your coach we’ll get DEEP into some fun projects.
This is the beginning of the beginning if you stick to this:) Keep me posted on your results!
CLICK HERE TO GET YOUR VERY OWN BRAND NEW JAR KIT, HAND-MADE ON ETSY!
Cheers and Love,
P.S. Hey:) Did someone you know who could REALLY use this information pop into your head just now? Don’t hesitate! Share the wealth. We can’t expect wealthy people to share their money with others if we ourselves are not willing to share what we have Right Now. So please, choose from the following icons below and Redistribute…Thanks
December 19th, 2008 at 6:12 am
Yes I agree!
Everyone should save some money and put it away.
Hoan
December 19th, 2008 at 6:14 am
And don’t buy urban outfitters stock or crappy clothing.
January 5th, 2009 at 8:24 pm
This was super helpful. I like how you’re including giving in there. Unselfishness is important. I also like how you’re talking about cutting down. It’s unbelievable how much $ we spend on eating out, drinking a bunch, etc. Sure, we can play, but not daily!
January 5th, 2009 at 9:19 pm
This is a fascinating article, and it definitely appeals to more than just musicians! It’s really good financial advice for anyone not independently wealthy. Maybe even them, who knows.
January 5th, 2009 at 10:22 pm
We were just talking about this kind of plan in class today. It sounds like a really smart thing.
January 5th, 2009 at 11:44 pm
What a great article! I use a modified version of this system, but I’ve been slacking. I’m inspired to get back on track now!
January 5th, 2009 at 11:58 pm
Great advise. Most people won’t have the discipline to do this. Payoff is too far out and wants are to close up.
January 6th, 2009 at 4:00 am
This truly is an absolutely astounding article. I’m a bit of struggling music producer trying to learn the ins and outs of it all and still manage to keep the bills paid, and I must say the advice given in this article is that of a genius!
January 6th, 2009 at 4:14 am
I’ve seen a system like this with envelopes, but this is the first time that I’ve seen a jar/envelope for charity! What a great idea! The financial freedom jar/envelope is a good idea, too, as a tool to help an artist (like myself) help liberate ourselves from “day jobs” and focus 100% on our art!
January 6th, 2009 at 5:25 am
It’s always smart to let your money work for you. Having a nice budget guideline to help is that much better.
January 6th, 2009 at 6:38 am
I found this really helpful. Especially at the this point in my life. I mean people are always giving advice and such, but they never break it down exactly like this. I really found it very inspiring, and something that is easy to implement.
Thanks!
January 6th, 2009 at 6:54 am
This is so helpful. So often people feel they have the right to give financial advice, but they never really break it down so effectively.
It’s very inspiring, and let me just say, something that I will be trying.
thanks!
January 6th, 2009 at 6:54 am
This is so helpful. So often people feel they have the right to give financial advice, but they never really break it down so effectively.
It’s very inspiring, and let me just say, something that I will be trying.
thanks!
January 6th, 2009 at 10:33 am
While this is good advice, in today’s economy, especially for artists, we are living paycheck to paycheck. I do not have any money left over after I pay for necessities and expenses. I do not have any money to give or save. If I ever get to this place you speak of and am able to do this though, I do agree it will work.
January 6th, 2009 at 10:36 am
Very good and incitefull blog great job.
January 6th, 2009 at 12:46 pm
This was very helpful and full of great advice.
Thank you so much, I’ll definitely be using these tips.
It really is crazy how much money we blow on stuff we don’t even need.
January 6th, 2009 at 3:42 pm
this is an effective system, however i tend to believe that the artistically oriented mind does not easily work in such a regimented way. This seams a great way for the average paid-weekly employee to manage their money, however, the vast majority of self-employed, in general, are paid inconsistantly, sporadically, and lets face it, sometimes not at all. This doesn’t seem to address that reality at all.
February 25th, 2009 at 4:54 pm
Thanks for taking the time to talk with the artists on etsy today! You did a great job. Sorry I had to ’step out’ for a portion of it. -kristen
February 26th, 2009 at 3:30 pm
Totally awesome. You rock! Thanks so much for sharing your knowledge.
February 27th, 2009 at 3:28 pm
I agree with what “anonymous” said earlier, that this seems like a great system for someone with a regular income; I wish I were employed and could try it out! As it is, all the money I have coming in goes toward rent, food, transportation, and occasional doctor visits (when I can afford it).
March 3rd, 2009 at 12:24 am
This advice is similar to a plan I’ve been following from a book by Mary Hunt, called Debt Free Living. Basically, it’s a return to living within our means… off of 80% (or less) of our income so that we can save for our futures, and for emergencies. I’d recommend her book to anyone who wants to get out of debt and manage their money better.
March 12th, 2009 at 11:51 pm
I’ll give it a try, in the absolutely most hardest time I’ve ever had in my whole life financially.
April 3rd, 2009 at 4:26 am
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June 1st, 2009 at 4:53 am
My income varies from month to month. So I’m thinking I have to add up my expenses and since that is 50% of the total in the jar system, I need 2X that coming into the house.
Where is emergency savings stashed?
June 1st, 2009 at 6:57 am
We actually just got a question similar to this but it’s not going to
post on our site til a bit later.
I answer it on video which you can see HERE…
With the JAR System you can lower the percentages if need be
OR what I did in the beginning (my income varies month to month
as well) was I stuck to Using A Certain amount of money for
THE Jar System. So, I just said,
“Ok, I can do $25 a month. I’ll split $25 into the JARS”
It’s not the amount so much as it it’s the habit. Growing money
is a skill, so most people would think that you need more money
in order to manage it. It’s the other way around in my experience.
I started managing the pennies I had and then I started making more.
It’s kind of like trying to collect a lot of money in a basket with a
whole at the bottom. You want to make sure your basket (the actual
money management skills) is solid…then your money will grow.
Confession: I totally used the JAR system with just over $1 before. LOL.
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