Jam-Jar Budgeting


Jam-jar budgeting is a way of controlling your spending by dividing your money into different pots of expenses. It is a good way to priorities your money on the things that you need most and to keep a track on your spending to make sure you have enough to cover essential bills. You can also see regular habits and get more of a handle on areas to reduce your spending.

There are three ways to try jam-jar budgeting:

  1. Using real jars or envelopes to separate cash

  2. Having a few bank accounts to use as specific expenses pots

  3. Open up a specific jam-jar bank account

How to get started?

1. Start by making a monthly budget:

The jam-jar method works best with a bit of preparation first, it is important to make a realistic budget first.

  • You will need to know what your income is first

  • It might be helpful to try recording a spending diary before you look at your expenses in detail and/or your bank statements

  • If you withdraw cash regularly, what items are you spending it on?

  • Calculate your essential expenses, such as rent/mortgage/food/gas/electric/water/council tax/regular payments you are committed to contractually etc.

  • Think about your hobbies and entertainment

  • Identify any large expenses that you might need to plan and save up for, such as annual car insurance, season tickets or Christmas presents etc.

  • Think about savings, emergencies and a 'wish list' of 'want' items

  • If you need to cut down on your spending to make your jam-jars work, take a look at our 'Improving Your Budget' web page

2. Label Your Jam-Jars

Next you need to think about naming your pots/jam-jars. Depending on what money you have left over after your essential expenses, you decide what each of your jam-jars will be for.

  • Start by naming your jam-jars

  • Next, how much money do you need to put in each one?

3. Choose your Jam-Jar method

  • Envelopes or jam-jar pots?

  • A number of bank accounts?

  • A specific jam-jar bank account?

We have listed the choices below together with some pros and cons to think about.

Jam - Jar Pots or Envelopes

If working with cash is your thing, try real jam-jars/pots or envelopes. Using this method, you would put your budgeted cash in each jar, then when a bill is due to be paid, you would take the cash out of the appropriate jam-jar. If you were going out for the evening, you would take cash out of your entertainment jam-jar.

Don't be tempted to dip into other jam-jars when one has run out of cash, if this starts to happen a lot, you will need to think about reviewing your budget.


  • This method works better if your money comes in once a week but your bills are monthly. Putting money into a jar each week makes it easier to pay the bigger bills at the end of the month.

  • Having cash in pots reminds you how much you are spending during the month, this might help you control your spending habits.

  • Seeing physical cash helps some people budget better.


  • Not every bill can be paid for by cash.

  • Keeping cash in your house might not be secure, your contents insurance might limit the amount you claim upon theft.

  • You might find that bills are more expensive if you do not opt for a direct debit payment plan

  • Cash sitting in jars might be tempting to spend on things that you want but do not need

Bank Accounts as Jam-Jars

If you prefer this option, you will need to open up separate accounts for each area of spending and you will need to set up regular transactions between each account. You can either open additional accounts with your current bankers or with other banks. You can set up transfers between inter-connected accounts, these are accounts held with the same bank.

  • You can set up standing orders that automatically transfer money from your main account into these additional accounts one or two days after you’ve been paid.

  • Set up a Direct Debit for each of your bills.

  • You will need a sort code, an account number, any reference you want or need to use, the date you want the payment to start, the frequency (weekly/monthly etc) and the duration (until further notice or an expiry date)

  • Be careful to consider any clearing cycles when you set up regular payments, i.e. if you transfer money into a building society, will it take longer to reach the account than if to a bank account?

To set these payments up, you can speak to your bank or if you have online and/or mobile banking, you might be able to set payments up yourself. Make sure you choose accounts that are free to use and do not have any restrictive spending limits.

You can try a comparison site to look for bank accounts but might need to check further details to make sure that the account fully suits your needs. You can try the following comparison sites:


  • It can often be quicker and simple to open up additional accounts with your same bankers.

  • Your money is usually securer deposited in a bank than kept at home.

  • Once your standing orders have been paid, you can spend from your main account without risking not having enough left for important monthly bills.

  • It is a great way of spreading the cost of those larger once-a-year items like holidays, Christmas and car tax and MOT.

  • You can still see all of your accounts in one place if you sign up for open banking.


  • If you have a lot of jam-jar pots, you could end up with a lot of accounts to manage meaning you are creating a lot of administration for yourself.

  • You will need to manage all your accounts carefully to stay in credit and not incur bank fees and changes.

  • Opening multiple accounts might affect your credit score and the way lenders credit score future applications.

Jam-Jar Bank Accounts

Jam-jar bank accounts are a different type of bank account specially designed to let you divide your money into different ‘jars’ within a single account.

Jam-jar accounts usually work like this:

  • When you receive money into your account, you set an agreed amount to set aside for essential bills

  • Your bills are then paid via Direct Debit or standing order

  • The money you have left over is available for you to use freely, either on a pre-paid card or you can withdraw it from a cashpoint machine

Jam-Jar accounts are not offered by all banks, many credit unions offer them and some of the Digital Challenger Banks offer apps on a similar basis. You can search for a credit union using the links below:


  • It is easier to manage one bank account.

  • You can usually get a jam-jar account when you have a poor credit history.

  • The account provider will usually manage all your regular payments for you.

  • These accounts sometimes come with helpful budgeting advice and voucher/discount incentives.


  • There is usually an administration fee of between £5 and £15 a month. However, some social housing landlords and councils have been working with credit unions to offer tenants current accounts with lower fees. If your landlord is one of them, they might pay the administration fee for you.

  • If you can manage a spreadsheet and keep a track of your budget that way, a jam-jar account is an additional cost that you can do without.