Jam Jar Banking

“Jam Jar” Banking
Could Jam Jars help you to stick to a household budget? The important feature of “jam jar” banking is the separation of income for essential bills from spending money. Although sophisticated bank accounts are expected to become available, at present this can be achieved using two bank accounts. Whether with one bank or with two different banks, the important distinction is the way the accounts are used.

The accounts act as 'pots' or 'jam jars' containing money. One jam jar is for 'pending, including regular food shopping, and one for bills. To save money a third jam jar can be added by opening a savings account.

You decide how much money goes into each by working out how much you need for your bills and how much is left over, for example, from your income you need to set aside x amount per week/month to pay all essential bills, such as rent, council tax and utilities. This money is then left in the bills account with the remaining money being moved or kept in the spending account. You may also wish to allocate some money to a savings account, and this could serve as a emergency reserve.

The advantage of “jam jar” banking is that you no longer have to think so much about managing your money. You will have the reassurance that, come 'bill-day' if you have operated the accounts correctly, you will not have accidentally spent the money you need without realising it. It is especially useful for couples who may well have two accounts between them anyway.