Jar Method Budget Review – Money-Stupid Anonymous

A few weeks ago I started using Gail Vaz-Oxlade‘s jar method to budget my spending money. At the time, there were some great comments, including arguments for and against the jar method. Now that I’ve lived with this system for a while, I decided to lay out the pros and cons as I see them.

Jar Method Pro: It keeps your spending organized

If you are the type of person who hates to track, the jars make sticking to your budget really simple. Because your spending money is already separated into categories, and placed in separate jars (or envelopes, etc.), even if you don’t record your spending, you should still be able to stick within the limits for your categories and avoid blowing your overall budget. Now, that is not to say you shouldn’t track; tracking spending is a valuable component of the jar method. If the jars become a crutch, you may not deal with underlying problems, e.g. a lack of discipline, poor planning, etc.

Jar Method Con: It is really freaking inconvenient

This is a pro for some, and a con for others. If you really can’t control your impulse shopping, keeping all of your money in separate jars at home may be right for you (but, more likely, some intensive therapy is in order). Personally, I’m pretty good about avoiding impulse buys, so the inconvenience really got on my nerves. I had to either plan ahead or go home to get money before buying gas or groceries because I never had enough cash on me. That’s a waste of time which is, in turn, a waste of money. After spending the cash I then had to return the change to the correct jar as well, which made picking things up from different categories at once a major PITA. At the time that I first came up with my budget, Joe recommended I open a no-fee savings account (at an institution that encourages multiple accounts like ING) for my rarely-used gifts/clothing category. I think I’m actually just going to keep all of the money in the bank, except for the entertainment and household categories. Gifts/clothing and Other mostly sit untouched, building up for the day when I need a new pair of jeans, or a new pair of glasses. As for transportation, I usually fill my tank on payday and get an oil change every 4 months so I can safely pay debit for these purchases. Entertainment and household tend to be more variable, and are my “danger” categories in which have a risk of over-spending if I stopped paying attention.

I will (complaints aside) continue tracking. I’ve created a nice spreadsheet in which I track my spending and my (now largely virtual) “jars”. A simple formula allows the jar balance to be updated from month to month, so I will still have the benefit of tracking how much each category builds up over time without having cash all over my house. Even though the literal jar method wasn’t for me, I definitely recommend that compulsive spenders at least give it a try. My planning, budgeting, and tracking skills are a lot stronger because of it.

Jar Method Pro: It really makes you think about future spending

This is part of any budget, but GVO’s method made me think about future-spending for each category specifically, which I found really helpful. A good example of this is the clothing/gifts jar. It is a little-used jar for me right now, but when birthday season and Christmas roll around again I will have money built up so that I won’t have to dip into my fun money in order to purchase gifts. The same can be said for things like my license renewal in the Transportation category, and my next trip to the dentist in the Other category.

Con: It isn’t a great idea to have a ton of cash around

There are a lot of negatives to having cash build up around the house, e.g. theft. Cash can be really easy to lose, especially if you tend to stick it in coat pockets, your car, or anywhere else that isn’t your wallet. Cash doesn’t build any interest. When you get a lot of change it can be heavy to carry around. If you keep bringing home change to your jars you end up with a lot of pennies (although not anymore), nickles, and dimes that may need to be rolled and taken to the bank, which is inconvenient.

Jar Method Pro: It makes budgeting fun

Budgeting and tracking your spending money can be tedious, especially if you aren’t used to it. The jars make budgeting fun because you can see the money and it’s a challenge to stay within the jar amount each month. It breaks down the larger challenge of sticking to a budget into small chunks that make spending responsibly less intimidating.

Jar Method Con: I don’t like not having a credit card on me

I haven’t used my credit card for anything except ordering my Equifax score since last September, so I think I am safe to carry the card with me. For anyone who can’t have plastic in their wallet without buying a new pair of shoes, you need the full-on magic jar plan. I skipped that part. I like the security of having the card on me in case of an emergency. With that said, I have never run into a situation where I needed emergency money — but you never know. Same goes for carrying my bank card; it’s just nice to know it’s there.

Overall I liked the jar method. My spending money is now budgeted into smaller categories that are easy to maintain, and I’ve incorporated future-planning into my budget. The plan used on Til Debt Do Us Part isn’t for me because it’s just too high maintenance when I’m already on the path of spending responsibly and actively paying off my debt. I’m going to adapt the plan to meet my needs. The little-used clothing/gifts and other categories will stay in the bank, as will transportation. I’m going to continue to use cash for household and entertainment simply because these are the most variable categories, and the ones where I’m most likely to overspend. I’ll keep up the nice spreadsheet I made to continue tracking my categories. I’ve graduated into a hybrid personal finance system that works for me.