Do you have trouble keeping track of your money, especially when payday is a distant memory? You’re not alone. It’s been found that 18 million people in the UK worry about money at least once a day. But, if you are one of the 18 million or you just need a helping hand, there is a simple method you can use to help you keep track of your money and make sure you don’t overspend. Say hello to the jam jar approach.
It’s a way of splitting your money to make sure your bills are always covered and you know what you have left to spend. Having your bills set aside in a separate ‘jar’ means that you don’t have to worry about overspending and then not have enough money to cover your bills. Plus, when your bills are being paid on time every month, it can help to improve your credit score!
Create a budget
Start by working out how many essential bills you have to pay each month and exactly what they cost. For example, gas, electricity and water. Then, work out your less essential monthly bills, for example, a streaming service subscription. Total up the cost of all your bills to figure out how much money you’ll need to set aside each month to make sure they are covered. Remember to update your budget if there are ever any changes to your bills.
If you get paid weekly, you’ll need to work out your total outgoings for the year by multiplying the cost of your monthly bills by 12 and dividing by 52. Then you’ll know how much money you need to put aside each week to cover your bills.
Prioritise your spending
Decide which bills are essential to pay each month and which are a little less important. For example, if you want to pay off more of your credit card than you usually do, this would be considered less of a priority than paying rent or a utility bill. If an unexpected expense comes up, having your bills prioritised means you know how much money you can move around and where to take it from.
Set aside bills money
When you’ve worked out your budget and you know exactly how much is needed to cover your bills, you can set aside your money. Then, you don’t have to worry about bills not being paid or overspending. Everything left over is yours to do what you like with! You can separate your money whichever way works best for you. You might want to open multiple bank accounts, use envelopes or actual jars to put your money into.
Set up regular payments
Once your money has been moved to your ‘jar’, make sure that all of your Direct Debits and standing orders are set up for bills, so you don’t miss any payments. Remember to update your regular payments if there are changes to your bills.
We know what you’re thinking, how are you supposed to find the time to sit down and crunch all those numbers? That’s where jam jar accounts come in! They’re designed to do all the work for you, so you can have peace of mind knowing that your bills are always covered. They split your money for you into different ‘jars’ in the same account. There’s no need for multiple accounts, which makes it so much easier to keep track of your money.
How do jam jar accounts work?
When you set up a jam jar account, you’ll need to enter all the bills you pay each month and set up your Direct Debits or standing orders. When money is paid in, enough money to cover your bills will be set aside in a ‘jar’ in the same account.
With accounts like the thinkmoney Current Account, the smart budgeting tool automatically sets aside money for your bills every time your income is paid into your account. The money that’s left over is put on your card for you to spend. So all you need to do is provide your bills and set up your regular payments when you first open an account. The rest is done for you every month and you can always stay up to date with your money using the thinkmoney app.
If you’re concerned that a poor or non-existing credit history might hold you back from opening an account then don’t worry, thinkmoney don’t run credit checks to apply. In fact, their Current Account can help you boost your credit score or start to build one from scratch. So, if you’re looking for an easier way to manage your money and pay your bills on time, opening a jam jar account like the thinkmoney Current Account could be exactly what you need!
Disclaimer: This is a paid article from thinkmoney
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.