Monday, June 14, 2010


Sometime last year, I was invited to be a guest at a morning show where I got to share about how I manage my income. I still receive a lot of messages on my twitter account asking me where they can find it. Friends, finally I am responding to that request and writing about it here and I'm calling it my magic jars.

What I actually have is a system that I learned from Robert Kiyosaki & T. Harv Eker, tweeked it a bit and made it my own. It's an accounting system where I divide my income into several jars in order to properly manage it. Each time I receive income from my salary or from some other source, I divide it into several accounts:

1)VICTORY - this is my TITHE account. About 10% of gross income goes into this account and subsequently is tithed to the church. This is my way of thanking God and acknowledging that all my resources come from HIM. By tithing 10%, I am helping in building the church & bringing more people closer to God and contributing to the VICTORY of HIS KINGDOM. In Malachi 3:10 "Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this, says the Lord Almighty, "and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have enough room for it." So, my friends, TRUST that God will provide.

2) GROWTH - 10% of income goes in to this account. Also known as the FINANCIAL FREEDOM ACCOUNT. Once I have enough funds here, I divert it into an investment that earns me passive income: mutual funds, stocks/bonds, real estate or a business. If you have heard about "the GOOSE that lays the GOLDEN EGGS" and "living on interest" this is it. The GOOSE (INVESTMENT) that lays the eggs/interest (PASSIVE INCOME). It is never to be spent and instead it is TO BE INVESTED. Once your passive income becomes equal to your monthly salary, you can truly achieve FINANCIAL FREEDOM and choose to work because you want to, not because you have to.

3) LEARN - 10% of income goes into my EDUCATION fund. How do I know what kind of investments to pursue? I invest on myself & my education. I use this fund to pay for books, magazine, seminars, education. Anything that allows me to know more about proper financial management and investing. As an analogy, a small container can only keep so much while a big container can keep a lot. If you only know so much, then you can only keep some. While if you know a lot, you can keep and make much more. Some books to consider: Rich Dad, Poor Dad by Robert Kiyosaki, Secrets to a Millionaire Mind by T. Harv Eker. The Entrepreneurial Magazine also gives great ideas on what kind of businesses to invest in. Remember: INVEST ONLY IN WHAT YOU KNOW.

4) LIVE - 40% of my salary goes into this account to be spent for NECESSITIES. Living expenses, utilities, grocery, food, transportation, gym. Percentage varies according to your minimum desired lifestyle. Once your salary increases, your lifestyle also increases.

5) SAVE - 10% for a special savings account that I will eventually spend for something NICE TO HAVE such as a new gadget/laptop, a upgraded mobile phone, a new TV, a second car. Things that I don't really need but I would like to have. This totally avoids the habit of spending money I don't really have for something I don't really need. For example, if it costs P30,000 for a new phone and that is your salary for a month. How many months will take you to save up for the new phone? 10 months. After 10 months, you can now afford a new phone and you won't feel guilty spending it because you know that you have the funds for it. Fortunately, the SIP (special installment plan) is available for most credit cards. So for as long as the monthly payments can meet your monthly budget, you can purchase that new phone now while paying for it over the next 10 months! Guilt-free!

6) PLAY - 10% of income also goes here. This is to be spent EVERY MONTH things you would consider your PLAYTIME or luxury. Eating out with friends, movies, spa/salon treatments, travel, PSP, etc. This is to allow you to enjoy your money. After all, you worked hard for it! Once is a while, I set aside a portion if I want to save up for a holiday. This way, I can spend my holiday, guilt free!

7) SHARE - 10% of income is for sharing with those who are in need. If you contribute to a charitable foundation or helping out a relative/friend in need, this would be the account to get it from. This way, when opportunities arise, you can be generous because you know that you have the budget for it. :) Besides, we are made abundant so we can share God's blessings as well. :) Trust that it will come back to you a hundred fold. :)

The percentages I have quoted here are recommendations and not absolute. You can definitely change it according to what suits your needs & your lifestyle.

So some people have asked me, "Do you keep all your money into these buckets? What if a thief breaks into your apartment?!" The money inside are just for illustration purposes. I have managed to find a way in order to make my resources secure. Once the buckets are filled, I transfer them into a bank account. Yes, I do have a bank account assigned for each bucket & now make transfers via online banking which makes it more convenient. I also have a checkbook for each account so when making payments, I issue checks which correspond to the particular expense and pay my credit card accordingly, deducting from each designated account. This is just a system I have made in order to make financial management more convenient.

All our resources and talents come from God and we are to be good stewards of it for our benefit and for those of our brothers and sisters. If we don't manage it well, don't expect God to give you more. But if we can be trusted with little, God will definitely provide us with more.

Let us always ask if how we use our money glorifies God, the provider of all things. Like the parable of the talents, to whom much is given, much is required. May God bless you abundantly as you glorify God in all your ways.