Simple 6 Jars System to Automatically Manage Your Money

I am not a finance expert but managing money is something that everyone must learn including the developers, so I thought it would be a good topic to share the system I used to my fellow men and women in the IT sector. The method I used to manage my money is called the 6 Jar Systems introduced by .

The 6 Jars System

Basically, the idea is to divide your income into 6 accounts / jars which are

  1. Necessity – 55% of your income. Example: Rent, car loan, grocery, insurance, utilities (electricity, water, gas, petrol), and any other commitments.
  2. Long Term Savings / Spending (LTSS) – 10% of your income. Example: Travel to Thailand, down payment for your house, emergency funds, and any other long term purchases
  3. Play – 10% of your income. Any leisures that makes you and your family happy, such as fine dining, movies, short travel to another city, etc.
  4. Education – 10% of your income. Example: Coaching, online/offline class, books, Audible subscription, etc.
  5. Financial Freedom Account (FFA) – 10% of your income. Any investment vehicles, such as stocks, retirement funds, real estate, business venture, etc.
  6. Give – 5% of your income. Example: Charity or donation.

The percentage for each account can be vary based on your own circumstance. While you might want to skip some accounts, so that you spend more money on other accounts, it is better not to skip any account as each of them serve a unique purpose. For example, Financial Freedom Account (FFA) helps you to invest for your future while Give account gives you a sense of satisfaction and purpose as you know your money can help other people in need. You can read more in .

Automate It

While the system is great, what is even greater is that we can automate it. After all, this is what the developer likes to do, right? 🙂 Here are the steps:

  1. First, register 6 different bank accounts, and each of them represent a jar in the system.
  2. Then, calculate the amount for each account based on the percentage you have decided. Here is the that I have created to help me calculate the amount.
  3. Login to the bank account that receives the income, set it to automatically transfer to other bank accounts with the amount that you have calculated in step 2. I suggest you to use the bank account that you are logging in now as your Financial Freedom Account (FFA), so that you won’t “accidentally” spend extra money for your entertainment or any other purchases.
  4. Continue on from Step 3, if you are an employee, set the transfer date 1 day after the day you receive your income. For example, if you receive your income on 25th every month, set the automatic transfer on 26th every month.
  5. Remember to not spend your money right after you receive your income on the 25th, try not to even login to your bank account on that day, so that you won’t feel the urge to spend money.

Hope it helps you in managing your finances!

Leave a Comment

Your email address will not be published. Required fields are marked *