Have you ever felt that you’re not able to save any money? Trabaho ka ng trabaho pero wala namang bunga ang iyong pera. I’m sure many OFWs feel frustrated when they keep on working but do not feel the fulfillment of the money they earn. Parang puro nalang trabaho pero walang nararating.
I’ve learned a simple way to manage finances. It’s called THE MONEY JARS.
The money jars are aligned with the principle that: EARNINGS – SAVINGS = SPENDING . Each time you receive earnings, allot money for your savings (the first 6 jars) and THEN you have the remainder for your spending (the 7th jar).
The money jars helps make sure that we allocate a portion of all our earnings to the right uses. In essence, each time you receive money from any source of income (paycheck, business dividends, windfall, gifts, bonuses etc.), make sure to allot certain amounts to each of the seven money jars. The money jars are:
- Tithes (10%)
- Financial Freedom Account (10%)
- Long Term Savings for Spending 1 (5%)
- Long Term Savings for Spending 2 (5%)
- Education (10%)
- Fun! (10%)
- Necessities (50%)
Let’s describe these money jars in more detail.
Tithing is what we *return* to the Lord for all the blessings He gives us. If not for the belssings of our Lord, we wouldn’t be able to work and create value in the world. Here’s a quote from Bo Sanchez:
God gave you your life—every single moment, every single breath, every single second… God gave your talents—your ability to talk, to create, to earn money… God gave you your body—your eyes, your ears, your mouth, your hands, your feet, your heart… God gave you your mind—your imagination, your emotions, your reasoning, your language…
In the Old Testament, your Divine Business Partner only asks that you give 10% of your profits.
Release your Tithes to your chosen church or community as soon as possible, at most within a week. Don’t wait too long.
Financial Freedom Account (10%)
The Financial Freedom Account (aka FFA) is the fund you will use to “go home for good”. This can be allotted to invest in stocks (e.g. COL Finance), mutual funds or other investments. Grow this FFA. Make sure to put into your FFA. This is the solution to the problem of so many who feel like their money isn’t helping them “go home for good”.
Long Term Savings for Spending (LTSS1 and LTSS2, 5% each)
The LTSS is a way to save for a future spending. For instance, if you want to go home for a visit to the Philippines, you can allot 5% of your salary each month or kinsenas to save up towards your plane fare. You can choose to use LTSS to save for your kid’s education too. Anything that requires the discipline of long-term savings.
Action: choose something that you want to save for in the long-term. Label your money jar with that savings goal. 😉
If you ain’t GROWING, you are DYING!
If, after 2 years or 10 abroad, you are still the same person with the just same knowledge and just the same skills as before, well I’m sorry to tell you that you haven’t grown and thus you are DYING! The world is moving so fast, you must grow with the rest of the world.
Allot a fund for YOUR OWN education. This is separate from the education fund of your family back home.
When you learn more, you earn more!
– edWIN Ka Edong Soriano
There are many ways to use this fund. You can buy personal finance books. You can subscribe to Bo Sanchez’s Truly Rich Club where you get some bonus finance books and can learn how to invest in the stock market. You can use it for internet access and study a Pisobilities class from the Colayco Foundation. You can also allot this education fund to attend any of the local financial education classes given by our OFW support groups in your area. Of course there are ways to educate yourself without spending. You can read various finance blogs like “Ready to be Rich” by my friend Fitz Villafuerte.
The point of the Education Fund is to make sure you GROW YOURSELF. Grow yourself for yourself, for your family and because it is what our good Lord wants for us: to Grow.
This is the interesting jar. You know that feeling that triggers this comment about yourself: “Di ko man lang natikman ang sweldo ko!” This is a very bad feeling that can be counter productive. It can grow into resentment when you feel as if you don’t get to enjoy the fruits of your labor.
The FUN FUND is here to nurture your soul. You can spend it on ANYTHING you want that will make you happy. You can use it to spend on a new pair of shade, or a blouse, or a treat at your local restaurant. Here’s the guideline: It has to be FUN for YOU!
You are NOT ALLOWED to spend it to buy something for anyone else. Don’t spend it to buy a gift for others. This is meant to nurture your soul, so that you can “matikman ang sweldo ko”. 😉
Another thing: You MUST spend it every month! Required! 😉 Don’t go saving your fun fund for too long (e.g. 6 months). So that you get to nurture your soul on a regular basis.
And, lastly, is our necessities. This is where you get your fund for sending money to your family in the Philippines. This is also the fund which you use to pay your own rent, for your own food, your personal clothes and hygiene. Any other expenses that do not fall under the other jars will be taken from this necessities jar.
Other Notes about the Money Jars
- The money jars gives a *guideline*. There are no hard and fast rules. You can adjust the percentages if you need. For instance, most OFWs will probably want to increase their necessities fund to 60% or 70% so that they can remit more to their family in the Philippines. That’s fine. What’s important is to make sure to ALLOT money for EACH of your jars each time you receive money.
- The LTSS jars can be treated as one, if you wish.
- If you have debts to pay, you can use the LTSS jars to pay for your debts.
- Place the money jars in an area of your house where you can SEE them always, as a reminder. In my case, I have my money jars at my computer table at home.
- Place SOMETHING in your money jar EVERYDAY. For instance, everytime I come home, I bring out all the coins from my pocket and count how much. If I have 30 pesos in coins, I put in 3pesos (10%) in my money jars, and leave 15 pesos for my necessities jars. What’s important is developing the habit.
- When your money jars have a significant amount, go ahead and deposit it in your local bank. I personally have different bank account for each of my jars. You can do this as well.
Okay, now it’s time for some action.
- DECIDE to start your money jars today.
- MAKE YOUR JARS. Get some jars (or even envelopes if you wish). Label them immediately in big bold letters. Label them with the percentage you want to allot (whether 3%, 5%, 10% etc.). Include also a label on how you are going to use each of these jars. For instance, in my Fun Fund, I put a note on what items I want to spend for: a night at Shangri-La hotel. These labels are reminders to yourself how you will use each of your funds.
- USE YOUR JARS. Each and every day, put in money in your jars. When you come home, put in all your extra coins in your jars.
I hope you have learned some from this article. Furthermore, I hope you take ACTION. This is your key to financial freedom and coming home “for good”.
Growing with you,
edWIN Ka Edong Soriano
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