Can ‘a Jam-jar Account’ Save You Money?
Can ‘a Jam-jar Account’ Save You Money?, A new kind of account claims to help you with budgeting – can it really sort out your finances? Can jam jars really save you money?, Money is tight for most of us and it can be a real struggle to manage household budgets and keep clear of debt.
That’s why there’s been growing interest in so-called jam jar accounts. These almost always charge a fee but do much more than a standard or basic bank account.
Jam jar accounts manage your money for you. You specify what kind of ‘pots’ you need your account to contain and the account will automatically divide your cash up.
So, you might label one pot ‘bills’, another ‘savings’ and a third ‘spending’. Then the account only allows you to spend the money in your spending pot, giving you the reassurance that when your bills are due the money is there.
Quite a few banks provide this kind of paid-for account. For example, thinkmoney charges £14.50 a month and Secure Trust Bank says demand is so great that it’s going to relaunch its own budgeting account soon.
Why would I pay for a bank account?
If you have no problem managing your money and paying your bills on time then a paid-for jam jar banking account probably isn’t for you.
But if you never have enough money for your bills by the end of the month and you’re really struggling to budget effectively, then it might be worth the money.
Social Finance, an organisation that tries to use market principles to achieve social good, has pointed out that free banking isn’t free for anyone who can’t stay in credit.
“The current ‘free if in credit’ banking model in the UK, does not meet the needs of consumers on low incomes or with poor financial management skills who struggle to avoid penalty fees and unauthorised overdraft charges,” it warned.
Why a ‘jam jar account’?
Jam jar accounts are so-called because of the old budgeting trick of setting up different pots of cash for different bills.
I wanted to know how easy it was to impose a jam jar banking system on my finances without paying for an account. So I washed up some jars, worked out my budget and gave it a go.