Where the cash register runs away from us and what to do to control it.
I remember reading the term a few years ago: “The “latte effect”. A cash register that runs away for the little pleasures we could do without.
It is not about living in asceticism. It is about consciously buying and planning your expenses.
One in turn a gloss, a pile of body lotion, some nonsense at the cash desk. After a few years, such an amount can be consistently deposited and turned into a sum for which we can renovate the apartment or go on a great holiday.
But do we want to deny ourselves something?
The effect of the herd
If your friend has this or that and earns a similar income, you don’t see any reason not to have the same thing. We justify bad financial habits with the behaviour of others, which is all the more bad because each of us has different needs, priorities and dreams. It is bad when we have to adapt our lifestyles to our money management style, not the other way round.
Method of 6 jars of Harv Eker
Returning to the “latte effect”: recently I got into the hands of the book “Secrets of the Millionaire Mind”. Before we begin to refuse ourselves this coffee, let us approach spending differently, because the method proposed by the author of the aforementioned guide, Harv Eker, seems to make sense (at least in my opinion), and that is why I am writing about it here. Spending planning is inextricably linked to running a home. Therefore……………………………………………………………………………………………………………………………………………………………………………….
The idea is to divide your income into 6 amounts. Sweets are portable, of course, but I will stick to that.
1. jar – base, i.e. fixed expenditure
They should make up 55% of your income. With this “jar” you pay bills, rent, food, petrol, car costs. Not enough? Maybe you have too expensive a place to live and you have to give up on something. There are those who think differently: they are looking for additional sources of income or better paid work so that the 55% can cover their basic expenses.
2. jar – savings
It accounts for 10% of your income, which you can spend on holidays, cars, renovations or purchases of flats.
3. jar – fun
Here, too, we throw in 10% savings. We can use them for cinema, theatre, concert, but also for cafés and restaurants. When you earn $2,500, you have $250 at your disposal. You decide whether it’s an expensive concert or a cheaper cinema. Or maybe a cheaper place for dinner?
4. jar – education and personal development
You didn’t think about it, didn’t you? Meanwhile, you can pay for this money at the language office, books and workshops. It is worth bearing this in mind that if you grow, there is a real chance that your finances will develop together with you. This is also something else: people who earn money are not standing still, but learning all the time!
5. jar – investments
Another 10%, which land on a deposit, savings account… You will say..: “But I already have a jar with savings. That is different. Here we are putting aside the money that will work. Savings are money that is collected for a specific purpose. Investments are money collected for the purpose of “working” and making money. They will be useful in the long run.
The sixth jar is for others.
Karma returns, beloved. spend 5% of your salary on others. Find out who you can help wisely in your area. You will see that this jar will give you a lot of satisfaction.
PS I talked about jars with my friend:
– And where should I take my clothes and cosmetics from? From which jar?
– From what I have read, it appears that the first one – I am answering – is the one.
– There is no chance. I live beyond my means…
Like many of us. 😉