How To Manage Your Money Using T Harv Eker’s Money Jar System

When I was growing up, the only thing my parents taught me about money was, “Save your money up for “rainy days” that will come.” Except – there are 2 giant problems here!

  1. I never learned how to
    1. Invest money to make more money
    2. Budget and manage my money in order to have a balanced lifestyle
    3. Spend money wisely in order to enjoy money
    4. Give money away to bless more people
  2. I learned to focus only on “rainy days.” As a result – they kept coming into my life! So, I literally emptied my bank account over and over in my life.

It is only when I learned the Money Jar System from T Harv Eker in 2007 that I finally had a simple and effective system to manage my money. So, I credit my money success to him who changed my financial life. What changed in our lives since using the Money Jar System?

  • Our net worth increased by 10% every year.
  • We have a fully paid home in Singapore for $271,000.
  • We co-share 7 units of luxurious condominiums at Makati, Philippines
  • We owned a passive income Network Marketing business
  • We have money set aside that is growing steadily for our children’s education
  • We donate to charity without any reservation.
  • We created more peace in our relationship because my wife and I have our own “PLAY” money.
  • I get to go for Personal Development workshops and my wife can only say, “YES!”


Why Manage Money?

NOTE: Throughout this article, we use the terms, “Rich people” and “Poor people.” Now, this is NOT to discriminate anyone or any group of people. It is simply an easier way to identify the group of people (i.e. Rich people) who seem to have a lot more money than the average person while another group of people (i.e. Poor people) always seem to just make ends meet or barely have enough to survive. In his book, Secrets Of The Millionaire Mind, T Harv Eker discussed Wealth File #14:

This is in line with the book “The Millionaire Next Door” by Thomas Stanley who surveyed millionaires from across North America who reported on who they are and how they attained their wealth

So, to put it simply, in order to master money, you must manage money. Here are some mistaken beliefs about money that keep Poor People where they are financially, followed by the reality of the situation.

  1. Money management restricts freedom. Reality: Managing your money is the only way to eventually create financial freedom which is true freedom
  2. There is not enough money to manage.  Reality: Only when you begin to manage it, then you’ll have plenty of money. The universal rule is that, “Until you show you can handle what you’ve got, you won’t get any more!” So, you must acquire the habits and skills of managing a small amount of money before you can have a large amount.

Money Jar System

So how exactly do you manage your money? In 2007, I was taught this amazingly simple and effective money management method, Money Jar System. Since then, I have been using it and seeing results that prove that it’s working in my life. I’ll go into more details shortly; but let me give you a quick illustration of how this system changed my life.


Let’s go through each jar in detail.

FFA (Financial Freedom Account) Jar

When income comes in, Poor people settle the mortgage loan, pay the credit card bills, utility bills, insurance, etc first. Then whatever that is left behind is known as savings. And usually, there is nothing or not much left. Rich people follow the “pay yourself first” financial principle before spending the rest of the money. So, the Financial Freedom Account (FFA) jar is 10% of your total income. The idea is to grow this money so that it becomes a golden goose that lays golden eggs called Passive Income. This is done by investing this money into

  • Real estate
  • Business acquisition
  • Stock investing (not trading)

The FFA jar is your ticket to Financial Freedom. So, if you find that you do not have the discipline to save, open up a saving account in a different bank and make it really inconvenient to withdraw money. So, refuse to accept a ATM card or link it to any other bank accounts that you have. The only way you can withdraw from this account is to walk into a bank and queue up at the counter. And on top of the FFA bank account, create a FFA physical jar at home too. Each day when you come home, deposit some money into it. It could be $10, $1 or any loose change. Then at the end of each month, deposit this money into the FFA bank account. The amount does not matter, the habit does.

The purpose of the FFA physical jar is to place daily attention on your goal of becoming financially free. And when you do so, you attract opportunities and events to help you towards that. Basically, this simple jar becomes your “money magnet.” Don’t believe it? Do it and see it for yourself! Also, have you heard that we should have a “Security Net” amount that is equivalent to 6 months’ worth of expenses? This is important in case of unforeseen events that do not allow us to have working income coming into our life. These include

  • Retrenchment
  • Being fired
  • Personal medical conditions
  • Family incidents that require our full attention.

So, I would use the FFA jar to hold this Security Net amount too. For me, I split up every $1 into $0.50 for Security Net and $0.50 for future investments vehicle until I build up this Security Net amount. Then, I put this money into a fixed deposit or low-risk investment vehicle which gives you immediate access to the money whenever you need it.

FFA Jar Rules

You never spend this money. You can only invest this money in investment vehicles that have potential capital gains OR passive income streams. For any returns of your investment, re-invest everything back into FFA. Continue to do so until you are financially free. Then, you can spend the returns on your investment but NEVER spend the principal, which has a potential of more income returns.


playIf you are a SAVER, chances are you would be satisfied seeing the money accumulating in your life. However, you would also feel that there is not much fun out there. So, while the logical and responsible self is fulfilled, the inner self is not. And what’s worse, whenever you spend, you feel guilty that you should be saving it instead. Sound familiar? As a result, many SAVERS end up saying, “Enough is enough,” and they take out all the money and spend it, thus completely sabotaging their results.

What about SPENDERS? When you keep spending, not only will you never become rich but you will eventually feel guilty spending too.

So, that is where the PLAY jar comes in handy for both SAVERS and SPENDERS. It’s another 10% of your income for you to enjoy your life and to indulge yourself. Many financial gurus talk about saving 10% of your income to invest. However, it was through Harv that I realised I must have an equal and opposite account specifically designed for me to spend my money and have fun with it! So, that’s the role of the PLAY jar.

So, for SAVERS (and I am one), the PLAY jar motivates you to continue to follow the plan and makes managing money a heck of a lot more fun! And for SPENDERS, the PLAY jar ensures that you have lots of fun but within your means! In fact, when you stick to the plan, you will never have the guilty feeling of overspending any more! Your PLAY jar is primarily used to nurture yourself. So, use it to do things that you would not normally do. Examples include

  • Order a bottle of the restaurant’s finest champagne
  • Rent a luxurious yacht for 3 hours
  • Drive a Ferrari or Lamborghini for 1 hour
  • Stay in a high-class hotel for an extravagant night of fun
  • Take a ride in a limo
  • Sit in the front row for a concert of your idol singer
  • Have a luxury spa pamper you from top to toe
  • Buy the top-of-the-range golf set you have been eyeing
  • Go on a VIP Tour of Universal Studios or Disney

Or just enjoy the form of luxury that nurtures your soul the most!

PLAY Jar Rules

You MUST blow all the money in this jar every month in a way that makes you feel rich. If there is a particular spending whereby one month of PLAY money is not enough, you can accumulate up to 3 months to blow jar. If it is a big item requires more than 3 months of PLAY money, use LTSS jar (discussed next) instead.

LTSS (Long-Term Savings for Spending) Jar

ltssPoor people go for instant pleasures. So, the moment they see the new Mac computer or Louis Vuitton bag, they simply swipe their credit cards and worry about the bills later. On the other hand, Rich people learn how to delay gratification. They save up before they spend. Even when they go for installment payments, they already know that the money will be allocated each month to pay the credit card bills. So, the third jar is called Long-Term Savings for Spending Account (LTSS). This is another 10% of your income.

As the name implies, it is a jar for you to spend. However, unlike the PLAY jar, it is not meant to be spent every month. It is meant to be accumulated so that you can spend it later on big items such as the new car, the latest LED TV, the dream holiday trip. As the saying goes, “A small monthly contribution can go a long way.” Here are a few more ways you can use LTSS jar

  1. Christmas gifts fund – I have a private coaching client who would spend close to $2000 each Christmas to buy gifts for family members and friends. So, December became a really tight budget month for him. When he implemented the Money Jar System and saved $200 each month into the LTSS jar as a Christmas gift fund, he had the best Christmas the following year.
  2. Childrens’ university fund – My boy is now 11 years old and my girl is 8 years old. So, my wife saves a fixed amount each month into the LTSS jar as their university fund. For every $10,000 saved, we put it into some fixed deposit or very low-risk investment vehicles to have a slightly better returns compared to bank deposits.
  3. Payable tax – In some countries, taxes are immediately deducted on payday. However, in some countries (e.g. Singapore), taxes are only deducted after one year of income. While it means more disposable income every month, it creates a lot of stress during income tax filing period! To ease that, you can estimate the amount of tax payable and start saving it up in the LTSS jar (similar to the Christmas gift fund)
  4. Emergency fund – This is a fund that you tap only in case of dire, unplanned events such as replacing your washing machine, water heater, air conditioner, dishwasher, and the leaking roof on your house. With this fund, you would not have to resort to credit-card debts. Note that this is different from the Security Fund under FFA jar.
  5. Paying off your debt – If you currently have debts, use at most 50% of the amount allocated to LTSS to repay them. Why not 100%? If you have debts, it is most likely a habit now. So, when you use 100% and clear off your debt, you’re just going to add new debts again. And as such, you can never buy the big LED TV or go for your dream holiday.

As you can see, usage of LTSS is versatile. I have 6 different uses of LTSS and I keep track of those amounts using a spreadsheet.

LTSS Jar Rules

You can save up money as long as you want in this jar. The number one mistake most people make is to simply save money in this jar without any set goals. Then, they simply spend the money in this jar whenever they feel like it.

EDU (Education) Jar

eduPoor people only think about the next movie, the next drama series, the next computer games, the next phone apps

that simply waste their time and money away. Now, I am not suggesting that you can’t watch movies or play games for some leisure. In fact, having some of these activities is good to maintain your life balance. However, you have to ask yourself – how much time and money have you invested in yourself these days? This next jar is called Education Account (EDU) which is another 10% of your Income.

Ben Franklin said, “If you think education is expensive, try ignorance.”; And T Harv Eker said, “If you are not growing, you’re dying!”

I can name you quote after quote by highly successful people who confirm that an impo

Importtant factor of their success is continuous education and investing in their own brain. After all, YOU are your most valuable asset! So, when was the last personal development book you read? When was the last inspiration movie you watched? When was the last seminar or workshop you attended that taught you how to move forward in your life? In fact, here is one of the best investments you can make. If there is any area of your life that you want to improve, get a coach!

Does Tiger Woods have a golf coach? Does Michael Jordan have a basketball coach? If you want to be good in something, you need a coach in that area. A good coach makes all the difference. Champions understand that they can’t be one without a coach. Look at the Olympic winners. Do you think they all have a coach? So, what about you? Do you have a MONEY Coach? I am going to be upfront with you that mastering MONEY is a lot of hard-work. And I always believe that everyone should learn about MONEY. That’s why I created a low-cost 1-on-1 private coaching program.

EDU Jar Rules

The money in this jar is to spend on books, audios, seminars or coaching. Spend it as and when necessary.


givePoor people feel that since they don’t have enough for themselves, they can’t give to others. This is a big mistake. When they think of “not enough”, they invoke the Law of Attraction which just attracts more scarcity into their life. Events arrange themselves and opportunities are missed so they prove to themselves that they are absolutely right about their current financial situation. And since we all know that any changes must start from within us, the first step in having more money into our life is to have abundance thinking.

And the easiest way to kick start this process is to give. The amount is not important; it is the act that counts. After all, we can’t give what we don’t have. And when we start to give, even one dollar, we are telling the universe that we have more than enough. So, the money in the GIVE jar is for giving away. This will be 5% of your income. It could be your favourite charity, your church or your temple. It could also be used to give to friends in financial need too.

Before using the Money Jar System in the past, I would think really hard about giving since the money could be spent on the family or on growing my business. And with money allocated each month to this jar, I can give without reservation and feel happier because I have more than enough and can easily afford to bless people who are less fortunate than me. One last thought… Have you heard of the saying, “The more you give, the more you get” or “Give, and it will be given to you?” In fact, I believe in this and have seen it work!

  • If you feel that you don’t have enough money right now, GIVE MONEY
  • If you feel that you don’t have enough time right now, GIVE TIME

GIVE Jar Rules

The money in this jar is to be given away when necessary. 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 (discussed next)

NEC (Necessities) Jar

Poor people spend whatever they earn monthly or worse still, they spend more than what they earn. This is evident by the high incidence of credit card debts. And many times, they buy items that are cheap rather than items that are useful. And it is evident by the amount of “stuff” lying around in the house. The last jar is your Necessities Account (NEC). This is 55% of your income. This is for your living expenses such as:

  • Personal Income Tax
  • Personal Allowance
  • Personal Insurance
  • Personal Health
  • Personal Grooming
  • Personal Fun
  • Spouse Income Tax
  • Spouse Allowance
  • Spouse Insurance
  • Spouse Health
  • Spouse Grooming
  • Spouse Fun
  • Child Allowance
  • Child Insurance
  • Child Health
  • Child Grooming

  • Child Fun
  • School Fees
  • Child Care Fees
  • Enrichment Class Fees
  • Parent Allowance
  • Parent Insurance
  • Parent Health
  • Pet Maintenance
  • Pet Health
  • Property Tax
  • Home Loan
  • Home Rental
  • Home Insurance
  • Helper
  • Home Necessities
  • House (Elect/Water/Gas)

  • Mobile
  • Landline
  • Internet
  • Cable TV
  • Taxi
  • MRT / Bus
  • Road Tax
  • Car Insurance
  • Car Loan
  • Car Maintenance
  • Car Petrol
  • Car Season Parking
  • Car Ad-hoc Fees
  • Personal Bank Loan
  • Credit Card Debts
  • School Loan

nec Rich people budget their money and track their expenses so that they know what they are spending on. They treat each dollar as a money seed that can grow into a money tree and they are prudent with their spending. They spend on what is “necessary” rather than what is just cheap. Through budgeting, they already know roughly how much they are spending on each aspect of their life. And through tracking their expenses, they know how close they are towards their goal.

Having said that, I personally do not advocate that you stick to your budget like a holy grail or aim to track your expenses with 100% accuracy. If you do, then it can turn out to be really stressful instead and you would end up stoping this process. Think from a company perspective. You can budget and track your spending but you would likely not be able to account for every single dollar.

Now, what if you cannot survive on 55% of your income? The first step would be to simplify your lifestyle. Instead of driving a car, how about using public transportation? If you are driving a Mercedes, how about converting to a Toyota? That is exactly what happened to one of my clients. She had a Mercedes with down payment paid for by her father as a university graduation gift. However, she had to pay the remaining car loan monthly installment. And by converting to a Toyota MPV, she saved $1,000 a month and had more seating space for the whole family. Other examples of simplifying lifestyle include

  • Instead of a full-time maid, employ an hourly-rate helper to do those chores that you hate (e.g. iron the clothes, clean the windows)
  • Instead of paying a high insurance premium, do a review and keep only those policies that are really necessary
  • Instead of eating out in restaurants weekly, look at more home dining (which is healthier also)
  • Instead of loading up the kids with enrichment classes, cut down to the essentials and have more quality time with them.

Bottom line is: If you didn’t have a job today, what are the items that would be really necessary? NOTE: 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

NEC Jar Rules

There are not many rules in using this jar. Again, simplify your life so that you can keep this amount to the minimum.

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