The 5 Jar Method To Help You Gain Financial Freedom & Abundance, And What Most People Do Instead


In this article, you will discover a simple money management system with profound implications and results, to help you gain financial freedom and abundance in your life, called the 5 Jar Method. These steps are extremely easy and practical for anyone to implement into their finances and have positive long and short term effects, BUT most people never learn to develop them. You’ll also learn what most other people choose to do instead and the results of their decisions. Are you doing what 4% of people have learned to do, or what 96% of people have learned to do. This is so important because not only does your financial habits effect you, but they are passed on to your children and their lives, and are probably being shared and transmitted to whomever you are closest with as well, such as your spouse, siblings, parents, and close friends. But don’t fear! It’s never too late to change habits, and I’ve heard it only takes about 30 days (or even less) of consistency to establish a new habit. And a special thanks to Craig Hill, who does a series called Ancient Paths, where I first learned about the original 5 Jars.

No matter where you’re coming from, this article is sure to share some financial golden nuggets to implement and practice right away to help you start turning the ledger in your favor.

A majority of people tend to dump all of their money into “1 jar”. That means they pool all of their money into one spot (say a bank account) and use that single pool of money to pay their bills, pay for groceries, pay the rent, pay for clothes, pay for anything else that needs to be payed, THEN if there’s anything left, they resort to spending, and THEN some will put what little they have left into savings, usually to be quickly spent later on. And worse yet, some resort to spending FIRST, then trying to pay bills, and fall into even more debt, and never get out. In short, these people spend 100% of what they earn. What has been passed down by some families and cultures, is not to follow the 1 Jar approach at all, but to split your money into five different pools, or 5 different Jars, each with a different purpose. These are based on Biblical principles.

Now, you may have to adjust the percentages of each jar to fit your particular circumstances, and maybe add a jar, but take the principles home and put them into practice, consistency is the key here. I will also warn you ahead of time that there are some references to religion in this article - not to shove anything in your face, but it’s where these principles originated from, and I would rather give honor to whom honor is due. 

So let’s dive right into it, saying, for example, that you were given $1,000 for your paycheck - perhaps use $10 if you are explaining this to a child.

“There is treasure to be desired and oil in the dwelling of the wise;
but a foolish man spendeth it up.”

~Proverbs 21:20

Now, this is in part a story. A story of a father teaching his son about finances, and the real result of that teaching. One day a father (we’ll call him ‘Frank’) decided to start giving his son (let’s call him Johny) a weekly allowance of $10 for doing all of his chores. BUT, he wanted to teach his son the two different ways he could handle his money first. One day, he called his son into the garage and said:
“Son, I’m proud of you, as always, and today I want to start giving you a $10 allowance each week for doing your chores. But first, let’s go for a drive.”
“Ok Dad!” Little Johny said, as they hopped into the car.
Frank turned on the engine and pulled out of the parking garage and then out the driveway. As they drove around a very nice neighborhood, Frank asked Johny: “do you like these houses, son?”
“They’re really nice, dad” little Johny said.
“Son” Frank continued, “these families, along with your mother and I, know how to handle finances...” he sighed and said, “let’s go and visit another neighborhood.”
They left the neighborhood they were in and drove for a good half hour until they reached a very poor looking neighborhood. Little Johny looked around sadly. Lots of trailers, mobile homes, and sheds in disrepair, and many people looking likewise sad... and hopeless. Spray paint on the fences and broken windows. “Dad, why are all these people living in houses like these?”
“It’s because they don’t know how to handle finances son” Frank responded.
When they returned home, Johny was glad to be back in a nicer neighborhood and in his own home again, yet the gloomy difference between neighborhoods lingered in his little mind.
“Son” Frank said, “which of the two neighborhoods we saw would you rather live in later?”
“I think this one dad” Johny replied.
“I think that’s a good choice” Frank responded, then continued:
“Now son” he said, “it’s time to give YOU your weekly allowance, here’s a $10 dollar bill.”
“Thank you Dad!” Little Johny said excited with glee.
“Now what are you going to do with it?” Frank asked inquisitively.
“I’m spend it Dad” Little Johny said exitedly.
“How much of it are you going to spend son?” Frank asked just as exitedly.
“ALL OF IT!” Little Johny answered with a gleam in his eye.
Frank sighed and shook his head slightly, “son” he said, “you’ve just chosen to live in the poor neighborhood.”
“What do you mean?” Little Johny said. Frank continued, “people with a poor mindset always spend first and manage their money last. Poor people are people who spend all they make. Now son, do you want to be a poor person or a wealthy person?”
“I want to be a wealthy person, dad” Johny said.
“Well then” Frank said turning towards 5 jars placed on his workbench and bringing Johny closer, “pay close attention son. We don’t look down on poor people, and we help them when and how we can, one reason we can do this is because of how we manage our money. We never put all of our money in just 1 jar. So I suggest I take away that $10 dollar bill and give you ten $1 dollar bills instead for your allowance. Now, for the first jar...”

Keep reading to find out what Little Johny did to purchase a house in cash as a teenager...

Jar #1 - Responsibilities and Managing Other People’s Money:

In Jar 1, you first make sure that you are paying off any debts and any financial responsibilities that you have. Remember this: the borrower is SERVANT to the lender... and isn’t that true? They say the first step to financial success is to get out of debt, take this jar and use if for that purpose, as well as ongoing financial obligations. You can find a great article with step by step instructions for getting out of debt from Robert Kiyosaki here.

And here’s a great video by him concerning good debt vs. bad debt: this is advanced financial advise, don’t try it until you’ve got the basics mastered first..

“We are richer, not just because we have a lot of money—but also from the experience and the lessons we learned digging our way out of debt.”
~Robert Kiyosaki

For Jews and Christians, (who should not be in debts - owe no man anything but to love him) there is a mandatory 10% of earnings given specifically to God, called a tithe (which would be the purpose of Jar 1), in obedience to His Word, and in honor of His commands, and thankfulness of His provision. It comes with promises of protection and providence. The tithe is considered as handling God’s money, meaning it actually doesn’t belong to us in the first place. It teaches us the importance of putting God first even in our finances, and of having the responsibility of handling something which is not ours.

This jar is all about handling other people’s money responsibly.

In Contrast:

Most people would rather pay for things they cannot afford. This causes them to pay more then what they would have paid otherwise if they had used these principles. They are often times late for payments, which causes them to have to pay more. This causes a majority of people to be trapped in debt they have no idea how to pay back. If you are one of these people, start using these strategies and take a look at the extra resources provided.

“80% of Americans Are in Debt” 

Here’s a few quotes from the BBC reporting on a government backed, British civilian debt survey:
“The problem is particularly acute in five English cities, where more than 40% of the population is struggling to repay debt.”

“According to the survey, 18% of Britons, 8.8 million people, consider they have "serious" financial issues.”

“The report found that 74% of those struggling with debt were "unhappy".”

The while speaking of the housing industry, said of Australians:
“Official figures released yesterday show Australians owe $1.8 trillion to banks and other lenders. Adjusted for inflation, that is the highest level since 1988, and the equivalent of $80,000 per person.” says:
“7 to 10 percent of college students will drop out of school because of credit problems.”

And says:
“Seven in 10 seniors (69%) who graduated from public and nonprofit colleges in 2014 had student loan debt, with an average of $28,950 per borrower.”

Additional quotes:

“The borrower is servant to the lender.”
-Proverbs 22:7

“The man who never has money enough to pay his debts has too much of something else.”
-James Lendall Basford

“It is the debtor that is ruined by hard times.”
-Rutherford B. Hayes

“Rather go to bed supperless, than rise in debt.”
-Benjamin Franklin 

Jar #2 - Generosity and Giving, the Anti-Scrooge:

In Jar 2, it’s all about giving and generosity. We recommend between 5%-10%, whichever you can manage.

“Wait a minute” you ask, “what are you talking about here? What does giving have to do with my finances?”

I’m glad you asked - I’ll tell you. There are a number of reasons actually. First of all, as I’m sure you are aware: there are lots of people around the world who are less fortunate than we are OR are just having a hard season in their life and having some financial difficulties, there’s probably some close to you.

“At least 80% of humanity lives on less than $10 a day. More than 80 percent of the world´s population lives in countries
where income differentials are widening”

“Nearly 1/2 of the world’s population — more than 3 billion people — live on less than $2.50 a day. More than 1.3 billion live in
extreme poverty — less than $1.25 a day.”

And your neighbor down the street may not be living on $2.50 a day, but perhaps they’re having some financial trouble. Shouldn’t we help out wherever we can? It’s important that we look out for each other and our fellow man.

Giving is a Biblical principle, with many applications. But it’s not just for others, it’s also for you... you reap what you sow. If you are stingy and grungy all the time, then you can probably expect the same in return if you are ever in a tight place, save perhaps for someone’s mercy to you.

Here’s a few selfish... I mean personal benefits you’ll receive from giving:

“Give, and it will be given to you. They will pour into your lap a good measure-- pressed down, shaken together, and running over. For by your standard of measure it will be measured to you in return.”
~Luke 6:38 

“... being generous will have the rather Machiavellian effect of making people like you. You can consider yourself to be buying future favors.”

“You will be less self-centered because you will be interested in the other person or charity.”

“Materialism will have less of a grip on your life. At the same time being generous will cause you to feel better about yourself.”


“When we experience events like illness, crime or unemployment, helping others buffers us from stress, which makes us less likely to die in the years that follow.” --> Amazing article on benefits of generosity

So, giving is freeing, healthy, and brings about positive change as it turns out. When you stop holding on so tightly to every penny (not being foolish, but simply generous), more seems to find it’s way to you. Make Jar 2 a part of your life. The point of jar 2 is having a fund set aside to help others who are in need.

“The desire to be generous stems from the discovery that our heavenly Father epitomizes generosity.”

In Contrast:

Most people would rather spend everything they have on themselves, and occasionally friends and family. They walk by people who have nothing, they say: “that’s too bad” without doing anything when their neighbor is in financial trouble, and if they themselves are in a tight pinch, they become very protective of what little they have. 

“The vast majority of Americans -- 76 percent! -- do not volunteer at all.
Only 10 percent donate blood. And 30 percent report not helping their friends or neighbors [Face palm].”

That is very sad, because being a Scrooge in life only results in an empty one, and hugging your money too tightly results in it slipping through your fingers, and when it’s gone, you realize you’ve not invested into anything of real value. Change that today. 

Jar #3 - Savings For A Rainy Day:

In Jar 3 we suggest putting in 10% of your money. This money is meant to accumulate until a day when you need it. Perhaps you have a large purchase in mind, put that money in here and buy it with cash. And if there’s ever an emergency, hopefully not, you’ll have money set aside to pay it off instead of falling into further debt. If you want to have a jar for that big purchase and a jar for emergency savings then that’s fine, just keep in mind the percentages, and be consistent. Also keep in mind if this is split in two they will grow slower, but you’ll have separate funds. I should probably point out here that it’s probably best not to save cash for a lifetime or for your ‘retirement’ (mainly because of depreciation), and also, again, that I can’t give you financial advise, so please do your due research, and act on your own accord.

Let’s say for example you had $1,000 coming in each month, now that’s only $100 each month, but that’s $1,200 in a year if you don’t use it. $1,200 to pay for something in cash or to use in case of a real emergency (NOT a Hamburger stop, or ice-cream stop, not for gas money, or hanging out with friends). Can you survive without spending that extra $100 each month, 10% of a $1,000 income? I challenge you to try, again - consistency is key.

If you don’t, you’ll likely spend it on lots of little things you don’t really need, that fill a temporary want. But if you do, you could actually purchase that larger thing sooner for cheaper (no credit interest), or save yourself from falling into debt or from cutting into your other finances from an unexpected expense.

The earlier you start and the longer you go (or train your children to), those financial numbers will grow, as they will with the other jars as well. Consistency and sticking to it, don’t be crossing your jars. NOTE: There are different ways to save besides with straight cash, the point of this jar is simply to start a savings fund of some sort, however you see fit, do your research first on the best way for you.

“... break your expensive credit habit by saving up for your purchases ahead of time.”
[you could be spending up to 50% extra otherwise].

“What will you do if your car needs some major repairs? Do you have $500 to $3,000 on hand?”

“The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all.”

Speaking of saving, there’s several ways you can find yourself with more cash - AFTER you’ve put your ‘official’ savings away in Jar 3. To find out lots of money saving tricks, check out this article from The Simple Dollar: 100 Ways To Save Money.

In Contrast:

Most people end up neglecting or abusing their savings. They either neglect it, as in they never put money into it or do not consistently do so. OR they take money out of it for things that they should not, such as hanging out with friends, buying food, making a purchase they don’t really need - and then another one, and another one, and another one. By doing that, they can never really make a larger, more significant purchase, or have anything saved up in case of an emergency.

According to, at least:
“47% of Americans Can’t Save Any Money” 

And according to CNBC:
“62% of Americans can’t cover unexpected expenses”

Emphasis on can’t. Now we understand that everyone’s got their own situations, but can and can’t are more than usually a result of what we believe and what we are or are not willing to do... are you willing to take the 5 Jar Method seriously?

“I can do all things through Christ which strengtheneth me.”
~Philippians 4:13 

“What we can or cannot do, what we consider possible or impossible, is rarely a function of our true capability.
It is more likely a function of our beliefs about who we are.”

~Anthony Robbins 

“Whether you think you can, or you think you can´t--you´re right.”
~Henry Ford 

Jar #4 - Investing and The Hope Of Return:

In Jar 4, it’s time to grow your money. We recommend 20% for this jar (depending on your own personal situation of course). So, how should we invest? I can’t give you financial instructions, however I can give you some examples. I would say, KNOW YOUR INVESTMENT. In other words, if you are going to invest in the stock market with this money, I wouldn’t recommend doing so unless you really know what you’re doing. If you were going to purchase an investment property for extra monthly income from rental fees, don’t do it unless you know what you’re doing (by all means, please learn how to do that). If you were going to purchase a true antique piece of art which could grow in perceived value, don’t do it unless you know what you’re doing. If you were going to purchase materials and sell a product at a higher price... you get the point, know what you’re doing. Make sure this money has a very good chance of returns, even (and especially) immediate returns. I would also suggest that you not use it all on the same investment at the same time, have some diversity in your investments and use it over time, making sure that it is giving you returns, that way you won’t risk loosing everything with one bad deal. And when you do make money on your investments, you can use some of that to reinvest or put aside for future investing (along with your continued investment fund in Jar 4). I know many of the financially wealthy say that you need a mentor, something worth looking into.

In our story with the father and the son, the son took his father’s advise. He took $2 of his $10 allowance and put it into the investment jar. For his investment money, he went to school and found all the kids that had spend all of their allowance during the week and had no more money left over for the weekend - habits learned and passed down from their parents. He offered them $X amount in exchange for double the following week (I believe he asked them how much they’d be willing to give back in return - which is a good business practice). He then could use the returns he received to lend to other children and to the same children again. This caught on, and soon nearly all of the kids in the school came to him when they needed extra money, and they paid him back twice the amount the following week. This young man continued his lending business throughout High School, and by the time he had graduated high school, he purchased his first home with cash. That became a second income for him as a rental, and later became his own home when he got married. That’s based on a true story of a young Jewish boy from the lessons he learned from his dad. All of this because of these jars his father had taught him at a young age.

Do you know what happened to the other kids when they graduated from High School? Read on to find out...

In Contrast:

Most people don’t even think about investing, and if they do, it seems like such a long road ahead. Instead, most people are raised with a spending mentality. They SPEND everything that they get SOON after they get it. That was the same mentality that all the other children at “Johny’s” high school had. They all had accrued credit card debts by the time that they had graduated from high school.

For more on investments, see these great resources:
-Rich Dad Poor Dad - book by Robert Kiyosaki
-The Motley Fool

“35% of Americans now say real estate is best long-term investment”

“Nearly 13 percent of Americans were starting or running new businesses in 2012”

“the national average savings account interest rate is only 0.06 percent for all balances, according to the Federal Deposit Insurance Corporation (FDIC). Meanwhile, the national average money market account interest rate is slightly higher. For deposits less than $100,000,
the average interest rate is 0.08 percent; for deposits of $100,000 and higher, the rate is 0.12 percent.”

“Data from the U.S. Department of Commerce show that the 2013 average personal savings rate was 4.5%”

Here’s a fascinating article on investing by the Motley Fool.


In Jar 5, it’s FINALLY time to spend! Spending is important, but it should come last, not first. If you’ve delt your percentages as follows: Jar 1: 10%, Jar 2: 10%, Jar 3: 10%, Jar 4: 20%, then you have a whole 50% for Jar 5 - your personal spending. In the example of $1,000 - you’ve got $500 to spend AFTER you’ve taken care of your bills and responsibilities, put money in a generosity fund (or given it to someone already), put money aside for a big purchase (or hopefully not, an emergency), AND have investment money for cash growth that you can later turn into a secondary (passive) income if used wisely.

In Contrast:

Most people spend first and worry about everything else afterwords. Or they only take care of immediate bills and then spend, neglecting the 5 Jar Method. This only leads to a life of debt and financial slavery, a life of never having enough, a life of barely scraping by, and even perhaps a life of stinginess and bad health. If that’s what you want, then go ahead and follow what the other 96% of people do. 


Now you have some very simple but very practical tools for getting ahead and not lagging behind... the 5 Jar Method. Remember, the key once you’ve established these and polished them for your own personal situation is consistency. If you aren’t consistent and disciplined, then these nor any other system will be able to help you. I would say this to you, get out of debt first, and stay out of it unless you know how to use it properly as an investment tool.

I am not a financial or an investment adviser, and so anything you choose to do from this article is of your own free will, and the consequences thereof are your sole responsibility.

There is another thing to consider: money isn’t everything. Oh, it’s a great thing to have, it’s an economic tool, and for the most part people need it. Thus the Bible has a great deal to say about gaining it and handling it properly, as you’ve seen a small part of in this article. However, there’s another side than this physical reality, which I would encourage you to study on your own using this amazing book I’ve been referencing... as to materialism, the Bible also says:
“There is that maketh himself rich, yet hath nothing: there is that maketh himself poor, yet hath great riches.” ~ Proverbs 13:7



5 Jars - Ancient Paths - Craig Hill
Richdad - Get Out Of Debt - By Robert T. Kiyosaki
Rickdad - Six Essential And Easy Steps To Eliminating Your Debt
Man vs Debt - Debt Quotes - Percentage Of Americans In Debt
BBC - People And Debt In The UK
ABC Australia - Household Debt threatens Australian Economy
Global Issues - Poverty Facts And Stats
Do Something - Facts About Global Poverty
Weizguy - Reasons You Should Be Generous - Selfish Reasons You Should Be Extremely Generous - Reasons Christians Should Be Generous
My Money Coach - Why Saving Money
The Daily Beast - 47% Of Americans "Can´t" Save Any Money - 65% Of Americans Can´t Cover Unexpected Expenses - Impossible Quotes - Henry Ford Quotes
Bible Hub
Bible Gateway
Love To Know - Teen Credit Card Debt Statistics - Student Loan Debt - Americans And Real Estate - Long Term Investing
Bizjournals - Start Up Activity In The US
Average US Savings Account - Americans Enjoy Saving More Than Spending
The Atlantic - Secret Shame - Half Of Americans Couldn´t Cover A $400 Emergency 


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