What is the Jam Jar approach and how does it help with managing money?

You may have heard of the Jam Jar approach to saving money and managing bills – or perhaps you have never heard of it before and just need an introduction to what managing money with the Jam Jar approach means.

Luckily it’s very simple in principle, but there are a few ways to be even smarter about how you set money aside either to put into your savings or ready to pay a particular bill.

Here we’ll start with the basics and then go on to how you can make your personal Jam Jar strategy a bit more official using online secondary current accounts instead of glass jars around the house.

Introduction to the Jam Jar approach

At its simplest, the Jam Jar approach to managing money almost explains itself. For each household bill, whether it’s a regular monthly outgoing, or a one-off item like a holiday you are saving for, you have a different jam jar.

When you have some money coming in, you take an appropriate amount from that income and put it into one or more of your jars – always with the thought in mind of how much you need to save in total.

Then at the end of the month, when a bill arrives, or when you’re ready to book that holiday, you empty out the jar and use the cash inside to pay – it’s simple.

Of course there are a few things to keep on top of, for example making sure you put the right amounts into all the jars, making sure they are all full by the end of the month, and keeping track of exactly how much is in each jar at any one time.

But as a basic saving strategy, it’s one that works for many people who struggle to see a single current account balance in that wider context of different bills and lump sums they will need to pay.

Does it have to be a jam jar?

Not at all – you can use anything you might have lying around at home. Some people use envelopes or spare wallets if they will mainly be saving bank notes rather than coins, and empty, washed-out coffee jars are popular too.

You can even buy completely new mason jars quite cheaply, so if you want to give yourself a well organised start, a set of these for all of your main household bills would be a good option without taking too much out of your budget.

Alternatively, you can use multiple bank accounts to do the same thing. In this case, you would have either one secondary account for all of your bills, or several for individual bills and savings ambitions, and you can either transfer funds in manually when you have some in your main current account, or set up standing orders to do it automatically.

Arro Personal Accounts as jam jars

The Arro Personal Account is an alternative to the jam jar banks on the high street – unlike some of those accounts, it does not have an overdraft or involve a credit check, so if you need to open several accounts to use as savings pots, they will not show on your credit file or damage your credit score.

Each Arro Personal Account has a sort code and account number, so as usual, you can transfer funds in using your online banking platform from your primary current account, or get friends, family, employers and so on to pay directly into the account for you.

You can check your balance for each account on the Arro Money online dashboard at any time – so there’s no need to count up individual coins from each jar when you’re getting up to date on your savings position.

Emptying the jam jar

When you need it, your money is there waiting for you. We keep all customer deposits in a separate account and don’t invest them – so we always have your money available to withdraw.

If you need to spend the contents of one of your ‘jam jar’ Arro Personal Accounts, you can transfer it out via Faster Payments and soon we’ll be introducing the functionality to pay suppliers directly via Direct Debit (not currently available, but it’s coming soon).

You also get a separate MasterCard® debit card with each account you open, so if you want to pay by debit card or even withdraw the account’s contents from an ATM as cash, these are options too, giving you plenty of ways to ’empty the jar’.