Budgeting using the jam jar approach

Budgeting using the jam jar approach

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Do you ever feel like you have trouble keeping track of your money as you get further away from your last pay day? You're not alone. 18 million people in the UK worry about money at least once a day, with a third of all adults saying it keeps them from sleeping. But thankfully, there's a pretty simple method you can use called the jam jar approach. With a little work, it'll help you keep track of your money and make sure you don't overspend.

The jam jar approach is a great way to have a better understanding of your money by making sure your bills are always covered. Jam jar accounts can help put you in a better position to save money from your salary rather than scrambling to cover bills at the end of the month.

What is a jam jar account?

A jam jar account is designed to let you split your money into different “jars” in the same account. The reason for this is to keep money for bills to one side so that they’re always covered and the rest of your money can be budgeted without needing to think about them.

What is a jam jar account?

A jam jar account is designed to let you split your money into different “jars” in the same account. The reason for this is to keep money for bills to one side so that they’re always covered and the rest of your money can be budgeted without needing to think about them.

How do jam jar accounts work?

  • When setting up a jam jar account, you’ll be asked to enter all the different bills you pay each month (e.g. rent, utilities, council tax, etc.).
  • The money to cover these bills will then be set aside in a jar whenever money is paid into your account.
  • Your bills are paid by Direct Debit or standing order from the bills account.
  • The leftover money is then yours to spend and budget as you like.

What are the benefits of the jam jar approach?

A jam jar account makes it easier to budget your money, as your bills are already taken care of, so you don’t have to worry about overspending the money in your account and not having enough for bills. Having your bills covered also means that by paying them on time, you can start improving your credit score.

The Department for Work and Pensions has described jam jar accounts as a good way for people to manage their money and start building up a pot of savings once they have a better understanding of how their funds are being spent.

Another benefit to using a jam jar approach is that you can keep your money separate (e.g. bills and spending money) without needing to have multiple accounts, making it much easier to manage your money.

How do I budget using the jam jar approach?

By following these steps, you can get started using the jam jar approach in no time and work towards a more stable financial future.

1. Draw up a budget

Without a budget, you’ll be hard pushed to work out which bills you need to account for with the jam jar approach. First of all, you need to figure out how many bills you have each month and what they’ll cost. You can then total up these bills and figure out how much you’ll need to set aside each month to make sure your bills are covered.

For more help with budgeting, check out our guides for planning a budget.

2. Prioritise your spending

When setting up your jam jar, you should consider which bills are absolutely essential and which are slightly less important. For example, if you want to pay off more than the minimum amount on your credit card debt, this would be considered less of a priority than something like rent or a utility bill.

Having your priorities in order when it comes to your bills is important as if you have an unexpected expense come up, you might need to move some money around. By noting which bills are a priority and which are less important, you’ll be able to understand how much money you have to spare in the jam jar.

You can read more about how to prioritise your bills here.

3. Set aside bills

Once you’ve worked out which bills you need to cover and how much they’ll cost, you can set aside the money for your bills. This way, you can go about your business comfortable in the knowledge that all the money in your main account is yours to spend, and any overspending won’t mean you can’t afford your bills.

With a thinkmoney Current Account, your bills will be set aside automatically every time money is paid into your account, so you only need to set up your bills when you first open the account.

4. Set up your Direct Debits/standing orders

Once the money’s been moved to your jam jar, the last step is to make sure that all of your Direct Debits and standing orders are set up for this new account. If you’ve got an account with us, you can get all the information on how to set up and change these payments here: