Systems are really important when it comes to money management because with a system you can make the money management automatically and never fail.
One of the starting points of good money management is to know where your money goes when you spend it.
The JARS Money Management System
The JARS money management system is explained in the book Secrets of The Millionaire Mind and it is designed to get you into financial freedom.
According to this system you split your earnings into six jars (or back accounts) according to certain percentages.
You need divide any amount of money that you receive between these six jars.
The picture below perfectly explains the JARS money management system:
Credit for image: Penny Control
Personally I think that this system is too complicated. I would prefer a simpler system to integrate into my money management habits.
This is too tiring and I know that if I start implementing it, I will quickly drop it because the system is complicated and you have to make calculations.
The 50-30-20 Rule
The 50-30-20 rule is a money management system developed by Elizabeth Warren in her book “All Your Worth: The Ultimate Lifetime Money Plan” and it consists on dividing your earnings according to this rule: 50% for necessities, 30% for wants and 20% for savings.
A lot of financial experts say that about 20% of your income should go towards savings.
And this rule applies to your after tax earnings.
The 30 Day Rule
The 30 day rule is a simple method to control impulse spending. According to this rule, when you think of buying something, hold on to this idea for 30 days. If you still want to buy the item after 30 days, then buy it.
There are also some apps which can help you with money management:
The 52 Week Money Challenge
The 52 week money challenge consists of saving $1 the first week, $2 on the second week, $3 on the third week and so on up to the 52th week for a year. You can save $1,378 by the end of this challenge.
While this challenge many not sound like you are saving a lot of money, it will help you to get into the habit of saving. The beauty of this method lies in it simplicity and the momentum that it creates.
A challenge seems difficult at the beginning but once you are used to it gradually anything is possible. The beauty if that you can get started with this challenge no matter your current situation.
Living paycheck to paycheck:
Living paycheck to paycheck means spending all of your monthly earnings and not saving any. If you are living paycheck to paycheck this simply means either that you are not budgeting your expense or that you don’t earn enough money to cover your expense.
Here are some tips to stop living paycheck to paycheck:
1. Track your spending
2. Make savings automatic
3. Save your raises
4. Most financial experts suggest that you need to have enough money to survive for six months if you lose your job now. Finacial expert Suze Orman advices that you need to have savings to survive up to eight months because that is the time most people need to find a new job.
5. Experts at Fidelity advice that at 30 years old you need to have save the equivalent of your annual wage, meaning that if you earn $600 a month, you need to have saved $7,200. While at 35 you should have twice as that, so the equivalent of two annual salaries.
6. Set a time and a day of the week to review your spendings for the week.
7. Plan you meals every week and shop for groceries every week.
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9. Read the “Rich dad, poor dad” book by Rober Kiosaki
10. Use your bank’s ATM to avoid paying extra fees
11. Invest your money
How to save $500 in 30 days
1. Stop spending on entertainment
2. Sell things you no longer need
3. Take in extra work
4. Create a budget
5. Make cuts to your spending
6. Freelance to earn extra money
7. Cook at home. Even though eating out saves time, it doesn’t save money.
8. Consume more stew and soup
9. Grow some of your own vegetables
9. Get paid to lose weight.
You can get paid to lose weight with the Healthy Wage app. You will set a weight loss goal and you will bet that you will achieve it. If you achieve it, you earn the bet.
In order to get started you have to pay Healthy Wage your bet, You can pay your bet all at once or every month as long as the challenge continues.
But be careful because you can also lose money on Healthy Weight. If you lose your money is going to go for the support of Healthy Wage and paying future winners.
Achievement is an app which will pay you to complete various exercises including walking.
10. Take your lunch to work.
11. Take surveys to earn extra money online
12. Budget your weeks. Figure out what you spend in a week.
13. Use cash instead of credit card. Using a credit card makes it easier to overspend.
14. Put more than half of your paycheck into your savings account.
15. Choose hobbies that require little to no spending.
16. Find a financial plan that works for you and stick to it.
17. Skip the caffe
18. Meal plan
Plan meals around what’s on sale. I recognize that it’s difficult to plan every meal of the day according to what’s on sale, but you can at least eat according to what’s on sale for one meal of the day, for example dinner. You can buy something that’s on sale for a week and eat every day of the week for dinner meals according to the ingredients that are on sale. So that you will be able to save in a week.
You can also check your refrigerator and freezer to see what’s left from previous weeks and consume that food, so that you can live with a minimum budget for a week and obtain your savings goals.
Eating what you already have on the fridge or eating foods that are on sale can be challenging as we as people are more prone to eating what we are used too and changing an eating regimen can be quite a challenge. The best possible way to apply this is to identify the kind of foods that are seasonal, so they are offered with a lower price on certain periods of the year and eat more of them when their price is at the lowest and change the type of food that you eat according to season.
There are some patterns in the prices of food and you need to notice them, especially during the course of a year.
You can also search online for recipes with the ingredients that you already have and the ingredients that are on sale.
I hope that my tips are helpful for you and you achieve your money saving goals!