How to get started?
1. Start by making a monthly budget:
2. Label Your Jam-Jars
3. Choose your Jam-Jar method
Jam-Jar Pots or Envelopes
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
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 Acoounts
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.