A big reason we arrange our budget the way we do is because of the show “Til Debt do Us Part.” The show basically takes couples that have gotten themselves in tens of thousands of dollars of consumer debt, and gives them strategies to become debt-free. The host, Gail Vaz-Oxlade, equips couples with tools to manage their debt, and be well on their way to financial security. Our favourite of the tools that she gives, is a pre-determined “variable spending” budget in the form of jars.
Our jars are actually magnetic spice holders, because we have a shoebox sized kitchen, but the jars are in the categories of “Groceries,” “Transportation,” “Clothing/Gifts,” “Other” and our allowances. When the baby is a bit older we’ll introduce an “Entertainment” jar for things like trips to the movies and the zoo.
The point of the jars, and this is a big one, is not for SMARTER spending ( though your money will of course go farther if you spend wisely). The jars are to LIMIT YOUR SPENDING. If, there is a great deal on chicken for the week, and I want to stock up, I only have the flexibility of the cash I have on hand. There is no “dipping” into future jars (or else the dipping would just be ongoing and defeat the point of a budget.)
Gail’s personal website has a budget builder tool, which helps you in determining how much of your budget should be going into each jar, as well as savings and debt repayment. The rule of thumb is that no more than 25% of your income should be spent on life, and therefore supplying your jars.
For anyone that is big on visuals, or is really tempted to whip out plastic and then be shocked at the credit card bill at the end of the month (me,) this is such a great tool. It’s worth sitting down with a whole bunch of bills/paystubs/bank statements and taking the time to do the worksheet, because being informed is such a big part of taking control of your finances.