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Works for Me Wednesday: The Jar System of Budgeting

In my column last week I wrote about the jar system of budgeting--it's really as old as time. You divide up your money that you have to spend each month into different categories, keep them in jars, and then only spend what's in the jar. Presto!

I received an email back from a reader of my column asking me to explain the jar system in more detail, because they're in debt and she wants to get out of it. So my Works for Me Wednesday post is all about getting out of debt, and budgeting properly!

Here's what you do. Figure out your income. Calculate your take home income on everything you make, and try to maximize that as much as possible. Can you baby-sit some kids a few times a week? Can you help your husband work overtime if possible?

Now figure out your expenses, in this order. First comes tithing. 10% off the top. It's always fun to have a family meeting each month and figure out how to dispense that money, if it's not already being given automatically. It's fun to give stuff away! And if you think you don't have the money for it, you're wrong.

A friend of mine told me that she and her husband have only begun to truly tithe in the last few years. But since they have, the money has never run out. Last week they found out that the husband, who has been taking seminary courses in a city three hours from us, is going to have to stay over an extra night a week to finish up this year. That's an extra hotel, and extra meals. About $150 a week.

They were quite scared, because money is tight. But the very next day they received a phone call from his work saying that they had made a mistake on his pay to the tune of $600 a month. Problem solved.

That doesn't always happen, but I've found that it frequently does. So tithe first.

Now you want to save, right off the bat. I recommend at least 10% in that, too. Your savings may be going towards debt repayment, but try to take out a good chunk every month to bring that debt down as quickly as possible. And take the money out at the beginning, not the end.

Now you have your remaining money. Figure out what is necessary to spend: rent, car payments, insurance payments, utilities, etc. Put this amount on a piece of paper in one jar marked "necessities".

The rest of your money is your disposable income. Take it out of the bank so you actually have it in cash. Don't spend using a debit card if you're heavily in debt, because it's easy to lose track of stuff. Cash you can't lose track of. Let's say you have $700 left. So how are you going to spend it? Figure out what your categories are going to be. I'd recommend food, entertainment & outings, health & beauty, clothes, transportation, kids' stuff, gifts, and whatever else you may think you need. Allocate reasonably.

Some of those jars are going to have hardly anything in them. It's going to be depressing. But do it. The clothing jar may only have $15 in it, but every month you can add to it until you can afford to buy some stuff. Similarly, the gift jar is one that's going to have to be added to every month so that when birthdays and Christmas roll around you have some money on hand to buy stuff. But you don't want to blow that all in one month, because you're going to need it on an ongoing basis. And the transportation jar is important, too, because it reminds you that taking the car everywhere may not be such a great thing to do. Can you walk a bit? If it's within 25 minutes you probably can, and that gives you exercise as well!

Last week when I was speaking about ten women who stopped by my book table paid in the same unique way. They pulled an envelope out of their purses and took the money out of their. I could tell that they were using the jar system. When they leave the house, they take the money from the jars and put it into separate envelopes in their purses, and that's what they get to spend. So everything is already budgeted.

The good thing about the jar system is that you know you won't overspend. You have to make those dollars stretch, and it reminds you how much you have. It teaches us to be really careful.

But it also takes away the guilt. You don't have to feel guilty for every Starbucks coffee you spend, if you've been careful this month and it's left over in the jar. It means that you do have money for that coffee. And you know you do! You're not just mindlessly handing over your debit card and hoping for the best.

When we started the jar system with groceries I couldn't believe how much I spend without thinking. When we had to budget, my shopping habits changed considerably. And for the better.

Budgeting really only works, though, if you take those big things off at the start. Give the money away and pay down your debt first. Don't wait to see what's left over at the end of the month. Make those things your priorities, and you will feel richer, because you are acting more wisely and more responsibly.

I hope that helps! And if you don't want to go all out with the jar system, why not at least try it for groceries? That's often our biggest expense when it comes to our disposable income, and if you get that under control, you'll feel better already!

Thanks for stopping by! Why not look around a bit? I've got posts on marriage, parenting, and more!

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At 9:38 AM , Blogger Kelly said…

I am a SAHM, so I have no income coming into our house. My dear husband, who works hard to make sure I am able to stay home, gives me a "pay check" each week. With this I buy the groceries and such. Whatever is left is for me personally and our son. (for new clothes, a ne toy, haircuts, etc)
It seems I spend WAY more money than I need to. I am going to implement your jar system to my money and see what happens.
I also have a Husband tithes to our church the first 10% of his pay...should I also tithe my first 10%, since that money came from him and has already been tithed from. I am struggling with whether or not this is the right thing to do. Just would like your opinion.
Thank you!


At 1:16 PM , Blogger MamaHenClucks said…

We use this system at our house, although instead of jars, we have a coupon holder that is labeled for all cash expenses, very much like the jars would be. The first check I write each month is for tithe. I'm always amazed at how much further our money goes when that is the first check.

For Kelly up above, I'm also a SAHM, so our system is very similar. Hubby gives me, or it goes into the money holder, my alloted household money. We usually only tithe off of his income, as what he is giving me is part of that income. That doesn't mean that we are doing it correctly, but that is the conclusion that we prayerfully came to.

I'm curious to see other takes on that, though :)


At 2:40 PM , Blogger Momof3 said…

I use this system but use envelopes instead. I just like it better.
To Kelly, I am in the same situation. The money he brings in is money for the family. I pay the tithing on the whole amount, then I get my allowance. Since its already been paid-for the family-I don't think you need to pay it again.


At 8:09 PM , Blogger Kaye Butler said…

Wow to the commenters. I have always worked outside of the home. I know a lot of women that are stay at home moms, I wish I could be one. I make myself work. I started out having to provide for myself at 16 and can not imagine depending on someone. I am not saying that there is anything wrong with what the other girls have said, but it just blew me away to read that they all get "allowances". Does that make me weak?

I operate on the jar system a little differently. We save all our change and dollar bills. This money goes for school lunches, school activities, and the less activities there are the more there is to spend at Christmas and vacation. If there is not extra in the jar, we don't buy it.

I have a friend that labels envelopes with items that she wants to purchase that are "silly purchases". When she gets enough in a particular envelope...she runs out and gets that item. I always thought this was a neat way to teach kids how to resist impluse and save money.

My sister-in-law tithe's once a month. I tithe every week, it just works better for me.


At 10:36 PM , Blogger BarbaraLee said…

I am getting into the swing of a budgeting. I use a coupon folder also. I do have a problem w/tithing. I don't always tithe w/money. The good Lord gives me other ways to do this. I have given clothes and garden goods to our local battered womens shelter & convent. I also give of my time, sewing trim for blankets for our church. It doesn't alway have to be paper. When money is tight I simply ask God to help me tithe in other ways. And He does.


At 3:07 AM , Blogger Lisa @ Stop and Smell the Chocolates said…

Interesting ideas. I do think this would help me get our finances in better shape - I know we spend more than we need to.

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Name: Sheila

Home: Belleville, Ontario, Canada

About Me: I'm a Christian author of a bunch of books, and a frequent speaker to women's groups and marriage conferences. Best of all, I love homeschooling my daughters, Rebecca and Katie. And I love to knit. Preferably simultaneously.

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