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Money Management Using Practical Strategies: The Six-Jar Method

Money management is something we all should do but often ignore. It helps develop healthy habits and good practices later on in life. However, schools often skip teaching good practices and we often find ourselves in situations where we're having trouble understanding how our bad spending or saving habits are impacting our finances. In turn, when most people dream of getting rich, they dream of a one-off event that will get them into the millionaires club. A high-tech invention, winning a lottery or a spectacular skyrocketing of stocks - these are the sort of things that make the hearts race. Yet in reality, such events are absurdly rare.

If you consider yourself more on the pragmatic side of things, you’ll understand that taking control of your finances can be a lengthy process that requires quite a bit of stubbornness. But money management doesn’t have to be a cumbersome task, with a little bit of psychological trickery you're able to better your financial situation very quickly.

If you’ve been struggling to come up with a sound strategy to better your money management, or have ever had a problem with budgeting, I've got you covered. The following system of money management will ease the anxiety and take away the headaches that are all-too-common when it comes to saving.

Money Management: Using the 6 Jars

The idea of the method is quite simple: You separate all of your income into 6 separate jars. They each will have a distinct function and will serve a different purpose in your journey to financial independence. It's a very basic yet effective money management technique that will help you reduce spending and increase savings. Once you start budgeting and have an understanding of how much you can spend each month, you'll have an easier time tracking your spendings and savings.

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Jar #1 – The essentials (50% of the total)

The money in this jar is for the everyday essentials. Expenses of rent, bills, groceries, taxes, and transport should be paid from this jar.

You could, in theory, divide it into even smaller fragments and count groceries, rent + bills + tax, transport separately. But for starters, one jar for essentials is enough. This allocates 50% of your budget on essentials only, you'll know exactly how much you have to work with and if you see that you need more than 50% for this, you'll be able to start working on strategies to reduce spending.

Jar #2 – Entertainment (10% of the total)

This is the jar you take money from when you wish to buy your first-edition vintage vinyl records, a bottle of Chateau Margaux and a trip to Laucala Island in Fiji. That is if you print money for a living.

If you don’t have any connections to the drug barons either, you’ll probably use this jar for cheaper entertainment options such as eating or drinking out, going to the movies or planning a little weekend getaway. They might not be as exotic as the options above, but they won’t break your budget. If you feel that 10% isn't cutting it you can start working on reducing your jar #1 spendings and allocate the funds to other jars.

Jar #3 – Savings (10% of the total)

This jar is the cornerstone of your financial independence. The money you put in, will at first act as your safety net in times of unemployment or health emergencyBut later, once you have generated a small fortune, you will use this money to generate passive income. Learn about stock options and educate yourself on the basics of investing.

One tip to get you started, only spend the money you generated from the savings, not the savings themselves. This jar is extremely important and while it won't make you a fortune overnight, you'll be surprised how quickly your savings stack up. And knowing that you have a "safety net" during harder times, will make sure you're less stressed out.

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Jar #4 – Education (10% of the total)

This one is self-explanatory. Invest in personal development and education and reap the rewards of an enlightened mind. Whether it is a bigger salary in your current occupation or a new skillset – financial reasons for developing yourself are clear.

If you are satisfied with your current level of education – use this jar for your children’s university. You should never stop learning, with rapid advances in technology and so many new opportunities arising you have to keep up with everything. You don't have to be an expert in every field, but having an understanding of how things work will give you a substantial advantage moving forward. If you're looking to expand your skillset without breaking the bank, you can find affordable and high-quality courses on BitDegree.

Jar #5 – Bigger Purchases (10% of the total)

It can be anything. A new LCD TV or a trip to Afghanistan (not that we would recommend that). If you’re aching to get your hands on a brand new Japanese motorcycle or a pair of cool shades, this is the jar to empty. Think of this as a no-interest loan, you get to spend it and buy the thing you want, but you'll have to fill up this jar again if you want to make another significant purchase.

This method of making big purchases works like a milestone, you reward yourself. And proper rewards are key to successful money management strategies. Because as long as you feel that you're making progress, you'll continue to develop good spending and saving habits.

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Jar #6 – Gifts and Charity (10% of the total)

Money might not give you happiness, but they can help you gift happiness to others.

Save this 5% of your income on gifts to friends and relatives. Give back to the society what’s left. Donate to help the destitute and disabled. Help out local animal shelters. Be virtuous. At the end of the day, you'll be happier for doing so. And if you're on an extremely tight budget you can re-allocate this to the remaining jars. And start keeping track of this one when you're more comfortable with it.


The exact proportions will vary month-to-month, but if you stick to the guidelines, you will improve your current financial situation. It's all about understanding how you're spending and why you're overspending. When you're able to pinpoint your exact points of failure you can start working on solutions. Of course, you were not thinking of stuffing coins into 6 jars that once stored mayonnaise? Were you? There are far better tools available. With the rise of financial technology firms and advancement in online banking, you're able to keep track of your spendings online. One particularly bright spot in the app market is ORCA. Not only will it help you track your expenses, but it will also aggregate all your banking accounts into one sleek interface. Apps like these can help you understand your spending habits and develop money management strategies for the future. By the way, to simplify your apps management, you can use this free app.

Also, if you want to learn how to manage your finances more efficiently, it's a good thing to browse through some online blogs focused on this topic. Here is the list of the top personal finance blogs to help you get some valuable tips and insights on money management.

If you're looking to make money management to the next level, embrace the new digital Mason jar – Upgrade to digital saving methods together with ORCA

About Article's Experts & Analysts

By Aaron S.


Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era. W...
Aaron S., Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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How do you manage your budget for money?

To manage your budget first need to define your monthly income and then plan your spending according to it. Spend no more than it is planned to and save a portion of money every month. Try to adapt to your plan, you may even change your habits accordingly, and keep track of it, do not overspend or buy impulsively & learn to plan your money.

How can I practice money management?

To practice money management you need to write down everything that you spend your money on bills, essentials, entertainment, and count your savings. Also, if you're in debt try to get out as fast as you can, so instead of paying to someone, you can start to save for yourself and satisfy your needs. If you're looking for more ways to manage your money you can try to learn about it online.

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