Jam Jar Method
Another tool to help budgeting is the well established jam jar method. Now you can do this digitally or start off in a more traditional fashion. For me I started off with jam jars as separate bank accounts but this can be literally glass jars, envelopes, accounts even separate purses, whichever route works best and practically for you.
This method builds on the first step where you have created your budget – where you determine how much of your income each month you are devoting to each section of your budget. See our Budget Example article.
So your salary hits – what next? Now in this day and age it does not make sense to withdraw the whole lot and split into physical jam jars or envelopes as you will find certain budget categories , Housing, Utilities etc. are generally paid by standing order and direct debits.
Go through the categories you have in your budget – (see our example below of budget categories) and determine where would it benefit you to have the cash for your budget, maybe you track it better having it physically or to be able to have it in a separate account. For example this is something I decided to do when saving for a holiday. Remember there are also many mobile phone applications out there that help provide this.
- Housing – Rent/Mortgage
- Utilities – Gas/Electricity/Water
- Food – Meals/Treats
- Transport
- Home Additions -Land line/Mobile/ Internet/Netflix/Insurances
- Pets – Food/Toys/Day care
- Self-Care – Toiletries/Gym/Hair Cuts/Hobbies/clothes/dentist
- Special Events – Birthdays/Weddings/Gifts/Holidays
- Future – Savings/Life insurance/Retirement
The goal of this method is to give you clarity of how much money you have remaining for each category during the month or how much you have been able to put towards those jars you have set yourself. See if the jar method works for you!