Lessons in budgeting from Nana’s jam jars

Tuesday, 2 December 2025

Martin Hawes is a financial writer and presenter, and has written 25 personal finance books including his latest, the bestselling Retirement Ready. He writes a weekly column.

OPINION: You have to be determined to write and live by a budget. For corporates, the budget sits at the heart of their operations – agreeing the budget is done annually, it is updated regularly and nothing gets spent that is not in the budget. Businesses and other corporates live (and die) by their budgets.

However, very few families match such a formal process. Perhaps a few who are disciplined (or desperate) set a budget and control their money with it, but not many.

Budgets have a bad reputation. For families, the very idea of a budget is deprivation, and going without. Budgeting has the same psychology as dieting – and we know that diets are the antithesis of fun, and that they seldom work.

In fact, budgets are simply about setting priorities, choosing the things that you want or need most. A budget establishes your income and then forces you to decide what you are going to have. As such, it ought to be a good and positive exercise.

However, most people turn this on its head and make it about the things they will not have. That makes it a negative, unattractive process and, with the slightest excuse, easy to abandon. Few people do a budget and even fewer stick with it.

I often think that those on low income are the best with money because they have to be. Needs must. They may not do a formal budget, but low-income people often figure out a way to manage their cash well.

My Nana was just such a person. In her day, there were no credit cards, no easy fallback if a bill could not be paid. When the landlord wanted the rent, it could not be put on tick, nor could my Nana reach for a credit card. If it needed paying it had to be paid – in cash.

Nana’s response to things being chronically tight was not to write a budget. Instead, she assembled a dozen jam jars with labels. When she received her pension payment she would put some coins in the various jars – half a crown in the jar labelled “milk”, a couple of florins in the jar for meat, a brown 10-shilling note for rent etc.

If there was nothing in the jar for milk then she drank her tea black. It was a simple system with incentives to make it work (black tea and no bread at times).

The jam jar approach to financial management is probably not taught as part of a B Com. That’s a shame, because it did work – and there is a modern equivalent.

That modern equivalent is a series of bank accounts, each for a major area of expenditure: mortgage, groceries, utilities, transport etc. Instead of jam jars to hold each category of expenditure, today you can have bank accounts. Each time you receive some income, you put a percentage into the appropriate account.

Bank accounts are a lot more convenient (and cheaper) than jam jars.

With time and experience you may need to adjust the percentage that you put into each account – it will take a while to get right and will need adjustment as costs or income change. However, once properly established it will take no willpower to live within your means – everything is done as a matter of habit.

An important account will be for “treats”, small though that account may be (my Nana’s was an occasional bottle of sherry). You should have a reward to make this project worth following – too tough and you are likely to drop the system.

A variation of the jam jars method is the “pay yourself first” approach. This is really for people who want (or need) to save for something.

This means that you do some numbers to see what you ought to be able to save each fortnight. When you have that figure, each pay day you put that into a dedicated account and live on the rest. The important thing is that you have saved an amount that you can afford and there is little or no spending creep – your saving has first priority.

The trick is to make saving a habit instead of relying on willpower. We are surrounded by advertising telling us we are not a proper person if we do not have that new oven, t-shirt, pair of shoes or McDonald’s burger. With all that temptation, reliance on willpower is just too hard.

Find a system and use it to help living within your means. Any system will do provided it requires habit and not willpower– even go and buy some old jam jars if that’s what it takes.

Martin Hawes is not a financial adviser and the information and opinions here should not be taken as financial advice.