How does the digital money jar work?

The digital money jar is similar to cash stuffing — also referred to as the cash envelope system, which pre-dates social media trends by decades, with some tracing it back to Elizabeth Warren's book All Your Worth: The Lifelong Money Plan and finance expert Dave Ramsey— and serves as a smart digital savings tracker for your budgeted funds. This compartmentalized approach allows users to track their spending, set limits for different categories and prioritize saving, without the hassle of handling physical cash.

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Are digital money jars a good idea?

Digital money jars offer several advantages over their physical counterparts. With these platforms, individuals can avoid the inconvenience of frequent bank visits to withdraw cash, reduce the risk of misplacing funds or not being able to use them when they come across a cashless venue or vendor - which will only continue to grow in popularity - offering a greater peace of mind.

Digital money jars also provide a more controlled way to manage variable expenses, which is typically where we tend to get ourselves in trouble since traditional bank accounts don’t have built-in features to cap you at $100 of spending on a night out or $200 on the grocery store. Overspending can add up quickly if we’re not careful.

How do digital money jars work?

Numerous online platforms and apps cater to the digital money jar concept, offering users a convenient and secure way to manage their finances. Apps like HyperJar, QubeMoney and KOHO Bank provide innovative solutions for fund allocation and to monitor spending with a digital cash-stuffing envelope system. Meanwhile, EQ Bank offers no-fee digital banking services that can be used to mimic the digital money jar experience.

Let’s take a look at four digital money jars, their top features and how they compare:

HyperJar: HyperJar features virtual jars and real-time notifications for visually tracking spending.

QubeMoney: QubeMoney offers virtual jars and personalized budgeting with a unique cash envelope system for effective fund management.

KOHO Bank: KOHO Bank provides a modern digital banking experience with a focus on fee-free transactions and innovative money management tools. They offer features like Goals and Vaults that are similar to money jars, but they differ slightly. KOHO also offers a free pre-paid, reloadable card and integrated app that gives real-time insights into your daily spending. Sign up for this card and enjoy the perks of this no-fee card, which functions like a chequing account but with the benefits of a credit card, even giving you cash back on all your purchases.

EQ Bank: EQ Bank offers a seamless digital banking platform with high-interest savings accounts and no-fee banking services for efficient financial management. However, unlike the other three, it does not offer virtual jars. Instead, you would open multiple savings accounts and create “jars” yourself. Accountholders are limited to five accounts. Additionally, when you sign up for a Personal Account with EQ Bank, you can enjoy an interest 2.55% everyday interest and an additional 1.50% when you set up direct deposit with your paycheque, no monthly fees or minimum balance and free unlimited bill payments, Interac e-Transfers and more. If you don't mind locking your money for a short period of time, you can also open a high-interest EQ Bank savings account. Agree to a 10-day lock-in and you earn 4.5% on deposits. Agree to a 30-day lock-in and you earn 5.0% on deposits. It's fast and easy to open an EQ Bank high interest savings account with their 100% online process.

Differences between banks
Features HyperJar QubeMoney KOHO EQ Bank
Virtual jars Yes Yes Yes No
Virtual card Yes Yes Yes Yes
Real-time notifications Yes Yes Yes No
Budgeting tips & tools Yes Yes Yes No
Automatic transfers Yes Yes Yes Yes
Spending tracking Yes Yes Yes Yes
Digital banking No Yes Yes Yes
Mobile app Yes Yes Yes Yes
No fees Yes Yes Yes Yes

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What is the 50/30/20 rule?

The 50/30/20 budgeting rule offers a simple yet effective framework for allocating income towards essential needs, discretionary or variable expenses, as well as savings or debt repayment. By adhering to this guideline, individuals can prioritize financial stability, allocate funds efficiently and work towards achieving long-term financial security.

The way it works is surprisingly simple. Take everything you earn in a month after taxes and break it down into three categories: your needs (fixed expenses such as rent or car payments), your wants (travel, shopping and entertainment) and finally, the important items that really shape your financial health and security — debt repayments and savings.

For example, if your after-tax take-home pay is $4,000 a month, here’s how that breaks down with some examples for each bucket:

Needs (50%):

Amount: $4,000 (total income) x 50% = $2,000 per month

Examples: Rent or mortgage payment, utilities (electricity, gas, water, internet), groceries, transportation (car payment, gas, insurance, public transport), minimum debt payments and any healthcare costs not covered by Medicare in Canada, such as certain tests and prescription drugs.

Wants (30%):

Amount: $4,000 x 30% = $1,200 per month

Examples: Eating out, entertainment (movies, concerts, hobbies), subscriptions (streaming services, gym memberships), new clothes, vacations, personal care products.

Savings & debt repayment (20%):

Amount: $4,000 x 20% = $800 per month

Examples: Emergency funds (3-6 months of living expenses), retirement savings, a down payment on a condo or house, and long-term goals (car, education).

Debt repayment: Extra payments towards high-interest debt (credit cards, personal loans).

Category Percentage Amount
Needs 50% $2,000
Wants 30% $1,200
Savings & debt repayment 20% $800
TOTAL 100% $4,000

How to start a digital money jar system

To kickstart your digital money jar journey, outline your monthly expenses, including bills, utilities, groceries and debt obligations. Breaking them down by needs, wants, savings and debt—as outlined in the 50/30/20 rule above—is a great way to start categorizing your various expenses.

Determine which digital money jar features matter most to you and spend additional time researching the four featured above — plus others — before settling on the one that best suits your needs. Once you select your online money jar, create your virtual envelopes, allocate funds based on your budget and monitor your spending patterns.

Establishing a structured system for managing your finances will help you build healthier financial habits, achieve your savings goals and ultimately prepare for future financial security.

Make the most of your savings with a high-interest savings account

High-interest savings accounts (HISAs) pay substantially more than traditional savings accounts, giving the funds you deposit the chance to grow. Canadians have a lot of high-interest savings account options to choose from. Most financial institutions offer them — here are some of those options:

Neo Money: The Neo HISA offers a 4% interest rate, as well as unlimited free transactions, and no minimum deposit requirements. The offerings of this account are pretty basic compared to some of the competitors, but Neo Financial could be a good choice if you have simpler needs. If you are just looking for a basic account with a good interest rate, it’s worth considering — sign up for a Neo Money account today.

Laurentian High Interest Savings Account: Laurentian comes with a reasonably strong with a 3.00% regular interest rate for their high interest savings account. Keep in mind this is the regular rate, not a promotional rate and there is no minimum account balance required. Sign up for this account and also enjoy the perks of no monthly fees and an unlimited number of deposits.

Scotiabank MomentumPLUS Savings Account: With Scotiabank’s MomentumPLUS Savings Account, the longer you leave your money untouched, the more it will earn. Deposits earn 1.40%, plus if you leave the money deposited into the account untouched for the first 90 days you earn an extra 0.85%. Leave the money untouched for 360 days and this bonus earn rate increases to 1.25%. This makes it ideal for those medium-term goals like saving a down payment for a house, a vacation or a renovation. Open a Scotiabank MomentumPLUS Account to start your savings journey.

Bottom line

The rise of money jars and cash stuffing is taking TikTok by storm, but adapting these principles digitally with apps like Varo, HyperJar, MoneyJar, and QubeMoney is a game-changer, offering more peace of mind, security and an instant, comprehensive view of all of your allocated funds. Digital money jars streamline financial management, boost savings and set you up for financial security in the future.

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Alicia Tyler Freelancer Writer

The Toronto-based journalist has over 18 years of experience as an editorial leader in digital and print media, specializing in consumer and service journalism. Her work has appeared in MoneySense, MindBodyGreen, Clean Eating, Yoga Journal and more. You can contact her via aliciamtyler.com.

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