What is the jam jar approach to money management?
Whatever your financial circumstances, whether you are financially stable or struggling to keep afloat, it is vital to keep track of your money. One method for dealing with finances is the Jam Jar method. This involves literally dividing your money into ‘pots’ according to what you need to spend on different things.
Assess your budget
Firstly, you need to look carefully at your financial circumstances to ensure you understand fully what is coming in and going out. Find out how much is money coming in and look at all of your expenses to see exactly what your crucial outgoings are and what is left.
Work out your priorities
Once you have a clear idea of your finances you can work out your priorities. Look at the essential expenses and allocate money towards them appropriately. Then you can create other ‘pots’ for your other priorities, for example, eating out, clothes, savings, etc.
With retirement age going up and austerity cuts hitting our pockets, young people are increasingly looking to save money for their future and by taking control of your money in this way, it may be possible to save more. Of course, for major purchases and saving considerable amounts, it’s wise to get up to date financial advice and wise to consult a financial advisor. There is specialised software for financial advisors to use and this advanced technology software for financial advisors can allow them to provide an effective and efficient service to their clients.
Deciding on your jars
Traditionally the money you have available would be divided into jars, hence the name. The jars can be labelled accordingly and then once the bill comes in the money is taken out of the jar to pay the bill. The benefit here is that you can actually see exactly what you have available, but the drawback is we don’t tend to deal with cash on a day to day basis anymore so might not be so convenient. The other option is to open separate bank accounts as your pots which might be easier for you if you like to bank online and it means you don’t have to keep all of your money in the house.
Whatever option you use, the principle is the same, by allocating your funds it should help to keep your finances organised.
