Monday, 23 September 2013

What is "Jam Jar" Banking?

With the economy still struggling, many individuals and households are finding it difficult to keep on top of their finances. When money is tight, it's all too easy to run out of cash and creep into your overdraft when it gets close to payday.

Jam jar banking is a phrase used to describe a way of managing your money so that this doesn't happen. If you imagine two jars, one labelled "bills" and the other labelled "spends". When you get paid at the beginning of the month, you add up the total cost of all your bills and other out-goings - rent/mortgage, utility bills, council tax and so on - and put that amount into your "bills" jar. The rest goes into your "spends" jar.

Now, every time a bill is due to be paid, the money is taken from your bills jar. Now you can go out and spend money from your spends jar without worrying!

This is the principle behind jam jar banking, also known as managed banking. You can do it yourself using your internet banking, or if you need help getting everything organised, there are companies that will do it for you - for a small monthly fee.

Never get charged overdraft fees again!

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