Nowadays, that thought seems very far off, as compared to the past. Why do I say that? Well, fuel prices, food prices and the like, they are all on the rise and rise. With the inflation working deviously behind the scenes, what may seem like a big sum decades back… say $50,000, now that seems like a paltry sum in this time of the day.
It is no wonder that many retirement dreams are shattered and left in pieces!
But, with prudent financial management, it is still entirely possible to retire and really live the rest of your latter days doing the things you like and enjoy life, with no further worries regarding your daily expenses etc.
The jars which are referenced in the title of this blog post, that is the crux of the solution to your retirement plans – your money jars.
If you observe carefully, wealthy people manage their money rather well, and the poor, not at all. Therefore it is crucial that you learn to master your money. Only when you can master, and manage, your money, will that sum of money to able to grow bigger and bigger to assure you of retirement. And this is where the 6 money jars come in.
First, open a separate bank account. Put into this account 10% of your income on a monthly basis. (On a side-note, all the amounts referred to for this blog post refers to after-tax income.)
The money in this account is to be spent ONLY for investment purposes to create a passive income stream. Can you spend this money on other things? Nope! Never, in fact!
When you get returns, you may spend that amount, but NOT the principal invested amount. That amount is your golden goose, because it will lay all the golden eggs for you and keep on growing more eggs for you. This will be your first money jar, the jar of golden eggs.
The second jar would be something you may be happy to hear, because it is the jar of play. Yes, play!
Into this money jar, you will put in 10% of your income. Many people save and save for their retirement and the rainy day, and forget to put aside something for play.
Play is important because it promotes balance and wellness in your life. You need to pamper yourself and soothe your spirit and mind, so that you can go further in the long run. You wouldn’t want to be able to retire at the end, and then find that you don’t have the health or energy to do so, yes? Therefore, nurturing yourself through play is the best way to keep yourself balanced.
There is one rule for this money jar of play – You must spend it all every month. Yes, every month. The point is that you regularly indulge to reward yourself for making such an effort. With this jar, it makes your whole financial management plan more fun to oversee.
The other 4 jars are as follows:
- Jar Of Long-Term Savings – Allocated 10% of your income. As the name implies, the jar is meant for savings purpose only. The amount is NOT to be spent at all.
- Jar Of Knowledge – Allocated 10% of your income. In this rapidly-evolving world, it is important that you keep on upgrading your skills and making yourself marketable in as many ways as possible. Regularly expand your knowledge, in and out of your industry. Attend conferences and workshops, try out new things, upgrade your workflow processes, hone your mindset and so on.
- Jar Of Necessities – Allocated 50% of your income. As the name indicates, this will apply to your daily living expenses such as food, transport, rent, loans and so on.
- Jar of Giving – Allocated 10% of your income. While you are building your nest egg and living your life, don’t forget about those who are more unfortunate than you. They can be the homeless, the orphaned, or even the poor, sometimes abused, occupants of the animal shelter. If you can lend a hand as a volunteer, it is even better. By interacting with people, you bring sunshine and warmth to their lives. By interacting with animals, you help to rehabilitate them. If you are unable to spare the time, you can consider making a donation to the maintenance and upkeep of their respective premises or shelter.
So, those are the 6 jars (adding up to 100% of income) that will enhance your financial health, and in the long run, help you to retire early.
At the end of the day, don’t wait for another day to manage your money in the proper manner. Every second and every minute, your money, and your aim of retirement, is slipping away from you. Manage your money now, and you assure yourself of a better future in the long run.