RVing Full Time: Budgeting with Jars?
by bruceandtrisha | on January 21, 2012
When the dream of RVing full time is born…
the immediate focus of attention is often on choosing the dream RV. A trip to the local dealership or RV Show will quickly bring one back to reality when the price of the RV is revealed. The real focus needs to be on managing your money in order to gain the freedom for RVing Full Time.
Oh Boy! Now the rubber hits the road, the s*%t hits the fan, the gloves come off . . . a budget will be crucial for keeping you on track – both before you cast off and after you are rving full time.
Learning to manage your money is the most freeing and empowering life experience you’ll ever have.
There are many great experts in the field of money management; clearly, most of us need help with this discipline. It doesn’t matter who you turn to for the education and keys to money management. The important thing is that you do it.
The following system we learned from T. Harv Eker in his book Secrets of the Millionaire Mind. It’s referred to as the Jar System, but really, the jars are not the key – it’s your decision to take control of your spending and savings that makes the system work beautifully.
HOW TO USE THE JAR SYSTEM
Each payday, or each time you earn money, you will divide your income among the jars according to the suggested percentages. If your first glance at the percentages leaves you feeling that this is unrealistic for you, understand that the suggested percentages are just that – suggestions for the ideal budget. Adjust them to fit your situation.
If you need the visual motivation, buy the jars – label them – and sit them where they are visible every day, as a constant reminder and inspiration that you are taking control of your spending and savings. We found that some of the accounts worked best in a bank account while others worked fine accumulating the cash at home.
There’s no right or wrong way to use the jars. The success comes from sticking with the plan. When we first started the jar system, the Necessity Account took 85% of our income. Over time, we’ve been able to reduce it, but we’re not quite to the recommended 45%.
NECESSITY ACCOUNT (45%): This account includes the necessities you need to live – rent or mortgage, utilities, bills, clothing, food, gas, cosmetics, etc.
FINANCIAL FREEDOM ACCOUNT (10%): This is your golden goose and it’s used for saving for investments. It is never touched for emergencies, vacations, etc. It is your ticket to financial freedom and should be guarded as if it were sacred.
LONG-TERM SAVINGS FOR SPENDING ACCOUNT (10%): The money in this account is used for those special big ticket items like a cruise, a special resort vacation, a toy hauler . . . anything that costs a chunk of change. You save for it here instead of pulling out the credit card or taking out a loan.
SHORT-TERM SAVINGS (5%): This is the emergency fund to use for repairs and other unplanned expenses. Again, the purpose is for building a savings to use instead of credit cards.
EDUCATION ACCOUNT (10%): This money is used for your personal growth. Investing in yourself! Books, CDs, courses, seminars . . . all for your education and improvement are paid for out of this account.
GIVE ACCOUNT (10%): This money is to give away to your church, your favorite charity, to whomever is making an impact on your life.
PLAY ACCOUNT (10%): This is the fun account – your mad money! It can be spent on anything your want – a massage, manicure, movies, dinner at a fine restaurant . . . it doesn’t matter. But, what does matter is that you spend it every month. This is not a savings account – it’s a reward for sticking to the jar system! Some couples share the play money and make a mutual decision about how to spend it. Other couples split it and have complete freedom to buy whatever they want without the other’s approval. Use it however works best for you!
It’s a simply system that produces amazing results. Remember, you can adjust the percentages to fit your current situation. If all you have left after paying the necessity account is $20, divide it among the rest of the jars. But, be diligent about putting money in each jar.
Learning to manage your money is a discipline that will reap huge rewards. We highly recommend reading T Harv’s book now, and when you have saved up enough in your Education Account, attend one of his workshops – it will change your life and your finances!
Stay Tuned – more articles to come in this series: RVing Full Time!
To see Part 1 of this series on RVing Full Time Click Here.