Jam-jar budgeting: The simple trick to organise your finances

We’ve talked in the past about ways you can use technology to help you budget, but there’s one particular bit of tech that’s been around for hundreds of years you can use too. The jam jar. Or, more accurately, a few jam jars.

My Grandma used this method to manage her household finances. She didn’t have a lot of money when she was younger, but she used jam-jar budgeting to keep track of her money and she always knew how much she had.

how to budget using a jam jar

What’s jam-jar budgeting?

Jam-jar budgeting means making a budget and splitting your money up into the various ‘jars’ you have for each area of your budget. It means you can see exactly where your money is going.

A family in Birmingham used the technique to stick to a carefully planned budget. They managed to pay off around £10,000 in a year.

How to get started with jam-jar budgeting

Here’s a step-by-step guide to get started with jam-jar budgeting.

  1. Create a budget with every possible expense listed (we’ve got a handy guide to getting started with your budget)
  2. When you receive your money you can then allocate it to each area of your budget, putting the money into the relevant pot
  3. When you need to spend, you take the money out of the relevant pot
  4. Keep an eye on the different pots to make sure your budget matches what you’re actually spending.

coins in a big jar

Do I really need to use jam jars?

Nope. You can use envelopes, sandwich bags, empty tins, or any container to put your money in if you like. You don’t actually have to use cash to divide your money into different pots either. You could use a spreadsheet or a notebook instead; just find whatever works to help you keep track of your spending.

The important thing about this method is that you’re using your budget in the real world, dividing your money into the spending areas, and keeping track of what’s going out.

Here are some ways to divide up your money when you’re using jam-jar budgeting:

  • Jam jars – just make sure you’ve washed out the jam first!
  • Envelopes – these are useful as you can write what you spent on the outside of the envelope
  • Sandwich bags – great for using what’s already in your cupboards
  • A spreadsheet – the money stays in your account but you use a spreadsheet to keep track of how much you’ve spent on each area of your budget
  • A notepad – write down everything you spend and which category of your budget it comes from

Using jam-jar budgeting to track your finances

If one pot has money left at the end of the month and another was empty before payday then you can review your budget and see if it’s working.

If you’ve not spent your clothing budget in one month, you could roll it over for next month in case you need something more expensive, or reallocate it to something more urgent like an unexpected phone bill.

I’d recommend being flexible where you can. It’s important not to go wild with your budget, but if you’re too strict then it won’t work either. Be flexible with the money in your pots and move it around when you need to, but keep a track of it and change your budget if you’re always over in some areas and under in others.

planning finances


Will jam-jar budgeting mean I’ve got more money?

You won’t have more money, no matter how clever you are with your spending plan, but it might make you feel better off. If you know that your household bills have already been covered then you’ll know how much you’ve got left to spend on other costs, like food and travel expenses.

It’s a system that helps you feel in control and organised with your money, which is never a bad thing.

Can I do jam-jar budgeting if I’m in debt?

This system is perfect if you’re struggling with your finances and need to stick to a strict budget. If you’ve received debt advice then you’ll already have a detailed income and expenditure budget, so you can use that as the starting point.

Then you can spread your money between the different pots and see how your day-to-day spending matches up to the budget you’ve prepared with your debt advisor. If you find the system isn’t working then it’s a sign that you need to review your budget.

Is jam-jar budgeting safe?

Putting cash into jars or envelopes and leaving them in your home could be risky, as it leaves you open to the money being lost or stolen.

If you have any worries about the money being stolen or “borrowed” then it’s better to avoid using cash. Instead, you can keep your money in your bank account but then divide it up in a spreadsheet or notebook to keep track of what you should spend on each area.

Special jam-jar bank accounts

Some credit unions offer special types of bank accounts that work like jam jars, with your account having lots of sub-accounts for all the various bills you pay. The advantage of these accounts is that you shouldn’t be able to spend the money you need for important bills.

The Find your Credit Union website can tell you which credit unions are available to you, so you can investigate the options available. Leeds Credit Union have a “Bill Paying Account“, which helps you manage your bills but does come with a £2 a month fee.

Have you got any old-fashioned money-saving tips that still work today? Pop them in the comments below.

Posted by in Budgeting