This post is from Breanna Park! Read to see how she changed her financial life using the jar system!
Budgeting using the jar system
Do you like budgeting, or do you find it hard? Are you living paycheque to paycheque and feel like you can’t get ahead? My husband and I absolutely had this problem.
When we first got married, he had student loan debt and racked up a line of credit when he was laid off from his job, and I had a maxed out credit card.
This created a huge barrier to saving money for us. Why? We had 3 credit cards at 19% interest and the line of credit which was almost as high!
We also were barely bringing in more than minimum wage, so we could only pay our minimums, which was mostly just going towards paying off the interest every month.
A second barrier we had was our spending habits. When you only pay with plastic, it’s hard to know where all of your money is going.
One night we sat down with our bank statements and a calculator and we were absolutely shell shocked! We spent almost 900 dollars just on groceries for one month! For two people! How did we spend so much?
We would go for one or two things and grab other things that caught our eye at the same time. Because of this, instead of spending 5 or 10 dollars, we came out spending 50.
We knew we needed a change. We needed a huge change at that. We needed to implement a good budget system that would allow us to track our spending and allow us to save more.
My husband thankfully had heard of something called the jar system which worked as a HUGE success for us.
How to budget using the jar system
I will warn you up front, the jar system involves quite a few steps, but we found it much better because the money was in our hands.
We went to the nearest dollar store and bought a bunch of jars. We had one jar for every bill and decorated them all up with the names of each bill on them.
We had a rent jar, a internet jar, grocery jar, loan/credit card jar, car payment jar, car insurance jar, and a savings jar.
The next step is figuring out when we had money coming in. For me, it was every second Thursday, and for my husband, it was the 1st and 15th of every month.
We also wrote down when every bill came out. They were scattered all through the month.
The next step involved some math. We realized that when we got paid we had zero money left over because every ounce of our cheques were going to our bills!
For example, when my husband got paid on the first, our rent, car payment, and loan payment and student loans came out all on the same day. So BAM. It was in our account and out within a few minutes.
So since we got paid 4 times within one month, we divided all our bills by 4.
Our rent was 900 dollars a month, so divided by 4 pay cheque’s was 225 dollars. So every time we got paid, we withdrew 225 dollars and put it in the rent jar. Our internet was 80 dollars.
So every paycheque we took out 20 for the internet jar.
We did the same with our minimum payments on our debts, our insurance, car payments, etc.
We also took out a doable amount for groceries. This meant we physically had so much cash for groceries and we couldn’t go over, so we stopped spending so much on non-essentials, like chips and pop.
Finally, with the money that was left over, that was ours!
We took out 20 dollars each for the week until the next paycheque that we could spend on snacks and coffees and whatever, and the rest went right into our savings jar.
Boy, were we surprised how much that added up!
Of course, with withdrawing all your money, make sure to put it back in time for your payments! This meant putting our rent money in for the 1st of the month for us, and the rest according to their bill dates.
This budget system was a game changer for us.
For one, by splitting up the money evenly across each cheque, we weren’t spending all our money on certain bills with no money left over until the next payday.
Two, by physically having cash in our hands, we were so much careful with how much money we were spending.
This caused us to be more frugal and making it last, instead of just tapping our debit cards. We went from being in overdraft every month to actually having money left over!
If you find your money is disappearing every month, try this system. It’s a little work, but you’ll be SO happy you did!
What system do you use to budget? Comment below!
Hi! I am Ali, a homeschool mom who is passionate about science, managing my money and time well. Unfortunately, with an army of tiny faces, I am always still kind of a mess.
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