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Best way to manage money… is online?

January 8, 2010 9 comments

It’s pretty unusual for me to write something about managing money and reviewing a site on my blog, considering I have been writing programming problems and fixes here for the past few years. Anyways I think this topic should be of benefit to most of us here, and I’m currently in quite a serious need of money management, since my salary is not that big, and I’m expecting another baby this may (on top of the one I’ve already got :D)… so here I go.

From what I watched on tv and read on most magazines, the best way to manage our finances is to separate our monthly income into several money envelope or money jars. This envelope (or jars) should be used for specific reasons, and we have to be disciplined to make sure of that. So after a few readings and watching, I decided to give a try to a money jar system which was introduced to me through T Harv Eker’s book, A Millionaire Mind. Basically using this system, we should divide our income into 6 money jars, which are for:
1) Necessities
2) Education
3) Fun & Play (leisure and other unnecessary stuff)
4) Charity
5) Long Term Saving for Spending (LTSS)
6) Financial Freedom Account (FFA)

The first jar, as the name implies, is for necessities only. Usually this jar is where our income is most allocated to. Second jar is for education, which is to buy books or anything for self-improvement. Third jar is for entertainment or buy or pamper ourselves with our hard-earned money. Forth is for charity, while the 5th one, LTSS, is our main savings jar. The last one, FFA, is where we put our money for investment.

Here’s my comment for the T Harv Eker’s money jar methods:
I think it’s simply brilliant. All this while I thought a good money management method is to divide our income into only two things, which are for necessities and savings. Boy was I wrong. The T Harv Eker’s money jar methods totally owned me. Or if I was playing mortal Kombat, I would have been defeated by the ‘flawless victory’ by T Harv Eker. Dang.

The goodness of the method above is it covers all important part of money management. Yup, the book says giving a part of your income as charity is an important part of money management. When you give, you’ll get more. It’s the natural law of earth. And yup, I’ve never seen anyone became broke just because he/she loves to gives to charity. The opposite is true. Most millionaires I read loves to gives for charity. As T. Harv Eker said in the book the millionaire mind, “The mark of true wealth is determined by how much one can give away”.

Another thing is I never thought of allocating a part of our monthly salary for fun & play, education and investment. I thought buying something for fun and pleasure is only when you have significant amount of money left. I was wrong, again, because as my own experiences shows, when I tend to become over strict on my budget for a month or two (hence buying only necessary things), I tend to over blow it up the next month. It’s just natural I think. All of us needs to be pampered consistently, at least a little, by our hard-earned money. So this method of allocating a part of our monthly salary for leisure is very, very good. And for the education part, it’s quite good too I think, since it forces us to do our own self improvement, although currently I use most of my money in education jar to pay off my study loans. And finally, the investment jar. Most of financial management expert I have met insist that we have at least, a small amount of investment, no matter how small our salary is. So this gives me the opportunity to save a small portion of my money every month, and I intend to invest on something, perhaps a unit trust by the end of the year using the money I’ve saved in the investment jar.

So in my opinion, the money jar method above is the best money management method for most, if not all of us. But then, there’s still one problem for me: Implementing it. By implementing it is I mean; of course I don’t plan to buy 6 empty jars and withdraw all my monthly salary and put them into these jars. And I think keeping track of my expenses every day, and compare it to the balance of each jars, is too troublesome. Not until my friend introduced me to a website: MyFinanceX – Free Online Financial Planning Tool.

To my surprise, the website implements the same money jar method I described above and boy do they implement it perfectly well! The interface is very simple, especially after you’ve been familiar with the money jar method. You only need to key in your monthly salary (and you have the option to make the entering of monthly salary automated for each month), divide how many percentage of your salary should go to each jars (done only once), and then enter you’ll be presented with a simple interface for you to enter your daily expenses. It’s that easy. You can always check your expenses progress compared to your money jar allocations, generate charts of your expenses, and even share the charts with your friends! At first I thought what’s the point of sharing your expenses details with your friends in facebook, but on the other hand, I think it’s quite good to sometimes display it in my wall, so my friends can comment on my spending and give suggestions on how to reduce it. And for youngsters, I think it can be a perfect arsenal for you to ask more from your parents by sharing them your over spent charts :P. Additionally you can create several expenses categories under each of the 6 money jars. And the best thing is, MyFinanceX is free. 😀 . So hop on to http://www.myfinancex.com and register yourself an account, and start managing your hard-earned money the easy but very effective way!

To make matters more interesting, when I emailed the guys at MyFinanceX, they told me that a mobile version of MyFinanceX will be available soon. It means soon we can use our mobile phones to enter our daily expenses and view our money jars status (current website is not really mobile friendly I think, especially for normal mobile phones like mine). I think that would be much welcomed, since my mobile phone is the only stuff that can connect to internet that I’d bring around most of the time.

So if you’re searching for simple but really effective tool to manage and plan your money, look no further than MyFinanceX. You won’t be disappointed. Besides it is free, so what do you have got to lose then? 😀

Here’s some of my screenshots from MyFinanceX.com

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Categories: Finance Tags: ,