Are you looking for a smart way to control your spending and save? The 6 jar method is the solution to help you manage your spending effectively and ensure your personal finances are more sustainable.

MoMo knows that managing personal finances is not always easy, especially when you have to balance many expenses in your daily life. Today, MoMo Financial Assistant wants to share with you a very useful way to manage finances, called the "6-jar financial rule". So what is the "6-jar rule" that helps you not only control your spending but also achieve your financial goals? Let's take a look at the article below with MoMo!

1. What is the 6 financial jars method?
1.1 Concept of the 6 financial jars method
The 6 financial jars method is a way to divide your income by percentage into 6 different jars, each jar representing a specific financial goal. This helps you easily manage your money, ensuring that you not only spend wisely but also save and invest for the future.

1.2 Benefits of applying the 6 financial jars rule
Improve your ability to manage your personal finances: The 6 financial jars principle will help you easily control your income and expenses by dividing your income into clear goals. This helps you avoid spending recklessly and always have a specific financial plan.
Ensure a balance between current spending and future investment: With the 6 financial jars rule, you not only focus on immediate needs but also allocate resources for investment, savings and personal development. This creates a balance between the present and the future.
Reduce financial pressure: When you clearly allocate each income into jars, you will know exactly how much money you have to spend without worrying about budget deficits and help you reduce financial pressure, bringing peace of mind.
Create a habit of saving and investing: Allocating income into savings and investment jars is an effective way to build a habit of accumulation, preparing for long-term financial goals. This habit will help you gradually increase your assets and move towards financial freedom.
Flexible to suit your personal circumstances: One of the great advantages of the 6 jars method is that you can flexibly adjust the allocation ratio based on your actual income and spending situation. This ensures that the method remains suitable for every stage of life, whether your income increases or decreases.

2. Analyze the value of each financial jar
Jar 1: Essential living expenses (55%)
This is the most important jar because it is used to pay for daily necessities such as food, housing, utilities and other living expenses. The goal of this jar is to help you ensure your current quality of life.

Typical items to put in jar 1:

Rent or installment payments.
Electricity, water, internet, phone bills.
Daily food.
Transportation (gas, bus tickets, vehicle maintenance).
Other living expenses (shopping for daily items).
Jar 2: Investing in finance (10%)
This jar is dedicated to investing and creating passive income. Smart investing can help your money grow, thereby gradually moving towards financial freedom. This jar is not for spending but for investing in financial channels that have the potential to generate long-term profits.

Typical items to put in jar 2:

Invest in stocks, investment funds.
Invest in gold or real estate.
High-interest savings.
Buy bonds or other financial assets.

Jar 3: Long-term savings and insurance (10%)
This jar is to prepare for emergencies and future contingencies. It helps you to manage when facing risks or unexpected large expenses. In addition, insurance is an important part to protect yourself and your assets from unexpected incidents.

Typical items to put in jar 3:

Emergency savings (should have enough money for 3 to 6 months of living expenses).
Long-term savings (buying a house, buying a car, future plans).
Health, life, property insurance premiums.
Jar 4: Education and investment in thinking (10%)
Investing in yourself is always the investment that brings the highest return. This jar is used to develop your knowledge and skills, helping you improve your capacity and expand your career opportunities. Learning not only helps you succeed in your work but also improves your quality of life.

Typical items in jar 4:

Register for professional courses, soft skills.

Participate in seminars, workshops to improve knowledge.

Buy books or learning materials.
Sign up for online courses on new skills.

Jar 5: Personal enjoyment (10%)
Life is not just about work and saving, you also need time to enjoy fun and relaxation. This jar is for leisure activities such as traveling, eating out, shopping or interesting experiences that you want to try. This helps you balance work and life, keeping your spirit comfortable and positive.

Typical items in jar 5:

Travel or picnic.
Eating out at restaurants, cafes.
Shopping for clothes, accessories.
Entertainment (watching movies, going to exhibitions, entertainment events).
Jar 6: Giving, charity (5%)
The last jar is where you spend your money helping others and contributing to the community. Sharing not only brings joy to the recipient but also helps you feel that your life is more meaningful. You can support charities, help relatives or participate in volunteer activities.

Typical items in jar 6:

Donate to charities.

Help relatives and friends in need.

Participate in social or community activities.

3. How to plan your finances with the 6 spending jars method

3.1 Instructions for planning with the 6 spending jars

Step 1: Determine your total monthly income

First, you need to determine and count your total monthly income. This can be your salary, income from side projects or any other source of income. This total income will be the foundation for applying the 6 spending jars principle.

Step 2: Allocate income into 6 financial jars

After knowing your total income, start dividing based on the spending principles of the 6 jars:

55% for basic living expenses: Housing, food, electricity, water, transportation.

10% for financial freedom investment: Invest in stocks, mutual funds, or any investment tool you find suitable.

10% for long-term savings and insurance: Build an emergency fund, save to buy a house or invest in insurance.

10% for education and personal development: Sign up for courses, buy books, or attend seminars.

10% for fun and entertainment: Travel, eat out, shop for entertainment.

5% for charity and sharing: Contribute to the community, support social organizations.
Step 4: Track and Adjust

Each month, record your income and expenses to see how your money has been spent. This makes it easy to compare your plan with reality and adjust if necessary. For example, if your living expenses exceed 50%, where can you cut back to keep the right ratio.

Use support tools

You can use expense management applications or Excel spreadsheets to track money coming in and going out. This makes it easy to divide the right ratio and control spending without getting confused.

3.2 Support tools for tracking and adjusting
To effectively apply the 6 financial jars method, you can use the following support tools and applications:

Excel spreadsheet or Google Sheets:
Create a personal financial management table: You can create a spreadsheet with columns corresponding to the 6 jars, enter the amount and track monthly spending.

Use automatic formulas: Set up formulas to automatically calculate the percentage and amount to allocate to each jar based on your income.

Digital banking apps and e-wallets:
Open multiple sub-accounts: Some banks allow you to open multiple savings accounts or sub-accounts, allowing you to divide your money into separate “jars.”

Physical envelopes or jars:
The traditional method: If you prefer a manual approach, you can use six physical envelopes or jars to divide your cash each time you receive income.

Notes and labels: Label each envelope or jar with a financial goal for easy tracking.

Reminders and planners:
Calendar and reminder apps: Use Google Calendar or a similar app to schedule regular financial checks and updates.

Note-taking apps like Evernote or Notion: Record your goals, spending plans, and progress for each jar.

4. Common Mistakes When Applying the 6 Jars Financial Method
4.1 Incorrect Proportion
A common mistake is not following the correct division ratio, leading to overspending on unnecessary items. For example, you may spend too much on entertainment and ignore investments. This will cause an imbalance in your financial management.

4.2 Not Regularly Monitoring Your Financial Plan
The 6 Jars Financial Method is only effective when you monitor and adjust it regularly. If you do not update and review your income and expenses, you may not realize that you are deviating from your plan.

4.3 Ignoring Long-Term Financial Investment
Sometimes people only focus on current expenses and forget the importance of investing for the future. Not investing or saving for the long term can lead to financial risks later if you do not have enough funds to achieve larger goals.

5. Practical suggestions when applying the 6 financial jars method

Suppose: You have a monthly income of 30,000,000 VND, we will see how to divide it into 6 financial jars in detail according to the standard ratio:

Jar

Ratio

Amount

Details

Jar 1: Basic living expenses

55%

16,500,000 VND

Rent: 7,000,000 VND.

Food: 4,500,000 VND.

Electricity, water, internet, telephone: 2,000,000 VND.

Gasoline, transportation: 1,500,000 VND.

Other living expenses (laundry, daily shopping): 1,500,000 VND.

Jar 2: Investment and financial freedom

10%

3,000,000 VND

Invest in stocks: 2,000,000 VND.

Savings in open-ended funds (with high and stable interest rates): 1,000,000 VND.

Jar 3: Savings and insurance

10%

3,000,000 VND

Emergency fund: 1,500,000 VND (this amount will gradually accumulate until it is enough for about 3-6 months of living expenses).

Life and health insurance: 1,000,000 VND.

Long-term savings (buying a house, car): 500,000 VND.

Jar 4: Learning and personal development

10%

3,000,000 VND

Register for an online course on soft skills or expertise: 1,500,000 VND

Buy books on financial management, personal development: 500,000 VND

Participate in seminars or specialized workshops: 1,000,000 VND

Jar 5: Fun and entertainment

10%

3,000,000 VND

Eat out with family and friends: 1,500,000 VND.

Short-term travel or weekend fun: 1,000,000 VND.

Shopping for clothes and accessories: 500,000 VND

Jar 6: Charity and sharing

5%

1,500,000

Supporting charities: 500,000 VND

Helping friends and relatives in need: 500,000 VND.

Participating in local volunteer activities: 500,000 VND.

*Note: The above information and data are for reference only. When using, you need to adjust the data to best suit your financial situation.

Conclusion
Applying the 6 financial jars method is the first step to controlling your finances intelligently. Maintaining this habit not only helps you achieve short-term goals but also creates a solid financial foundation for the future. Don't hesitate, plan your finances today with MoMo!

Note: The information in this article is for informational purposes only and should not be considered formal financial, investment, or legal advice. MoMo is not responsible for any errors or omissions that may occur. MoMo encourages you to seek advice from a financial advisor or professional before making any important decisions regarding your personal finances.