Five Jars’ Jewish model of financial management

BASED on an adaptation of Old Testament Bible principles, most modern Jews follow a simple personal financial management model. As we wrap up the year, this Hebraic Biblical personal financial management perspective may help you, dear reader, to transform your financial management mindset  to see money in better light, even in a tough economic environment.

From early childhood, Jews train their children how to think about money using the object of five jars.
Based on Proverbs 22:6 that says “Train up a child in the way he should go, And when he is old he will not depart from it,” a child is trained in financial management.

There is a very big difference between training and teaching.

Training is about giving a consistent practical example that is practiced over and over again and asking the learner to follow the example through regular practice.

Independently, some 10 years ago, I found that the concept of training can be modelled perfectly by a locomotive that pulls wagons.

In any case, before the invention of the train that moves on rails, the word train was already in existence.

Before the invention of the railway train, the term conveyed the thought of a sequence of mobile parts moving in tow to form a single long line.

It is that thought that was leased to name the invention that would come to be known as a train.
Training in the sense of imparting skills mirrors the behaviour of a train that moves along a railway line.

There is the locomotive that leads the way, with the wagons hitched to it following in tow. There is the railway line–the hitched wagons roll over precisely where the locomotive has gone over.

The whole system moves over the same track over and over again. That is precisely the depiction of the thought of training up a child in the Hebraic Biblical thought.

It needs to be firmly understood that in this worldview, a child “graduates” at the age of 12.

By that age, a child trained into this worldview is expected to be an independent thinker who has a complete self-reliance  skill set that includes productive capacity and sound financial decision execution.  

How do those who subscribe to the Hebraic Biblical mindset impart financial management skills to their children from as early as kindergarten?   This is how it is done: each child, from a tender age, is  given five jars. Each time the child receives money, they are required to distribute it among the five jars. Let us take $10 as an example.

Jar 1
Into Jar 1, the child is instructed to place 10% of the money they get. With our example of $10, the child places $1 in Jar 1. This is called tithe.

In the Jewish thought, this act of first setting aside money that will be given for the purposes of good causes trains a child to be generous.

The act helps to tap into a financial management law the Jews believe in: that a hand that gives will open multiple channels of income back into the hand that has given.

On a higher spiritual note, the Jar 1 allocation is a cure for selfishness where one is trained to first think about themselves and their needs.

In Hebraic Biblical system, a child is taught to first think about the needs of others before they think about theirs.

Jar 2
Into Jar 2, another 10% is put. This is money they set aside to help the less fortunate in the community. Based on our example of $10, the child is instructed to place $1 in Jar 2.

The concept buttresses the idea that one needs to think about the needs of others first before they can attend to their own needs. In the Jewish thought, this Jar 2 act is a way of building trust within the community and expanding opportunities for generating more income.  

The thinking is that the more generous a person is in giving wholeheartedly without expecting anything in return, the more trust the community invests in the generous giver.

Trust is a critical business success factor–it is reasoned that the community will want to support the enterprises run by one who is generous.

A child, through the Jar 2 habit, is being taught a powerful business principle to amass deep and wide networks that will become a powerful asset that will support their future business projects.

Jar 3
Jar 3 is the investment jar. In the Jewish training system, the child is instructed to place 20% of the money they receive in Jar 3. In our example of $10, the child is instructed to place $2 in Jar 3.

These are not savings. The money here must be grown by way of investments.

A child is taught that the money in Jar 3 must be put to work or sown so that it generates more income.

The child is challenged to think of business projects to undertake to grow the money put in Jar 3. If $10 were the money they received in a year, the child would be expected to think of ways to grow that $2 they put in Jar 3.

The child cannot argue that the $2 is too little to support an investment idea–they would have to find ways to grow that “little” amount.

Some who are not familiar with this worldview about financial thinking might find this thought to be impractical, citing all sorts of challenges.

If you are trained from early childhood to grow $2, your ability to see and exploit investment opportunities will be very sharp by the time you are 12 (the age of “graduation” in Jewish thinking).

Here is the power of training a child: children will not see it as impossible at all, but adults who have not been exposed to this early training will find it very difficult to apply the “little can be invested” mentality.

Personally, I train my children in the Jar 3 principle. It is amazing what kind of simple but profound investment ideas they come up with.

This past winter, my children requested 400 pea seeds that we had kept from a previous farming season–they sowed the seeds and took care of the pea crop.

When they harvested, they sold their harvest.

They re-invested part of the proceeds into another project. This is Jar 3 training. They have been doing this for some time–they have assets to show for their Jar 3 efforts such as goats, including top breeds.

Jar 4
Jar 4 contains savings for emergencies. Into Jar 4, the child is asked to put 10% of the money they receive.

This is to cater for emergencies. A child is trained from an early age that they need to plan financially to meet unforeseen challenges that will require immediate cash flows.

It might be difficult to liquidate some of the investments in Jar 3 to meet the immediate emergency event, hence the introduction of  Jar 4.

All this a child is trained in before they are 12.

Jar 5
Jar 5 is the expenditure jar. Here we have 50% of the money the child has not allocated into the first four jars.

That remaining 50% is put in Jar 5. The child is told they can spend 50% on what they like (within the frame of what is acceptable in the culture).

Here is the summary of the big picture conveyed by this Five Jars model.

First, it imparts the worldview that one must think about the needs of others, including the less fortunate in society, before they can satisfy their own needs. Second, it imparts the mindset that one should think of investment first before they think of consumption.

Third, it builds the habit that one must spend within their means and learn to adjust their lifestyle to fit their income capacity.

You need only imagine how transformative the worldview summed up in these three points would be to you personally and to your family. You can imagine too how our nation would be transformed if our government would apply these three principles that a Jewish child routinely applies.

You can try to start applying these principles today–that money you are planning to spend on your festivities, no matter how little, use it as a beginning to apply the principles explained here.

Having the expenditure jar as the only jar in your life is a vow of financial troubles either today or tomorrow. You may need to humbly retrace the training you should have received before you were 12.

Brett is a management consultant and a classic grounded theory researcher who has published research in an academic peer reviewed international journal. He can be contacted through email: [email protected]

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