Before there was the internet, or handy banking apps that automated your saving for you, people did most of their spending and saving with cash.
While itâs nice to not have to pay everything from your rent to your utilities in cash, there are a few tricks from that era that are still useful, and can even be revived for today.
One of those tricks is the Jar Method of Spending and Saving. Itâs got many variations, but the basics always boil down to the same thing. Hereâs how you can use it to make saving easier. â
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The jar method works by splitting up your money into many different categories. At the beginning of the month, or whenever you get paid, instead of having one bank account balance, you divide up the money you received into your jars. These days, itâs easier to do this with Pockets, where you can transfer money to instantly.
The jars are for spending categories. You should have one for the major ones: rent, utilities, food, clothes and savings. But you can add any number of categories you want: if you want to keep your habit of eating out in check, you make a restaurant jar. If you suspect youâre spending too much on clothes, you make a jar for that.
Each jar only has the money you need for that category that month. That means if you spend your coffee budget all in your first week, youâll have to deal with three weeks of low caffeination. If you have money left over at the end of the month, you put it in your savings jar. If you already put something into savings at the beginning of the month you should find yourself meeting your savings goals faster than expected.â
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Dividing our money into categories helps our brains understand how much money we actually have. When you rely on a single bank account balance, your brain often canât get past the number it sees, and doesnât factor in all the expenses coming at you for the month. This leads to an overestimation of your wealth, which leads to overspending.
By using the jars, you donât have a single number to rely on anymore. Instead, you associate balances with different categories. Itâs much easier to think âI have 80 euros left to spend on clothes and 120 euros left to spend on foodâ than it is to do that math from a bank account balance.
With the Vivid Money app, you can create up to 15 Pockets, which can cover a wide range of spending categories if youâre using the Jar Method. Give it a try, and see if you canât surprise yourself with your saving prowess.