Feed The Piggy!
Positives Of Saving Money In A Piggy Bank
A friend of mine places all of her daily change into a very large piggy bank each and every night. On average, she estimates that she adds around 60p each day into her not so little piggy. This equates to £219 each year. Every year, around Christmas, she empties the piggy bank straight into her savings account. This money isn't ear-marked for spending either, its part of her retirement fund.
After 25 years of saving money in a piggy bank and transferring to the actual bank, with compound interest at the average bank interest rate over the past 25 years, she will have £12,378. This all seems very positive.
Also, it is often stated that people are more likely to spend money if it is in loose change. Therefore, by taking out no loose change, it means that she has to “break a note” for a purchase. This helps prevent small, unplanned purchases and can further add to the loose change she can add to her Piggy.
Negatives Of Saving Money In A Piggy Bank
However, in my opinion, saving money in a piggy bank has its cons. The main negative impact is the loss of interest. She loses out on some interest by saving money in a piggy bank. For instance, if she were to place the money saved into the bank each week, she would still save £219 each year, but her balance after the 25 year period we looked at above (due to the impact of compound interest) would be £12,924.
Therefore, we are losing around £600 in interest over 25 years (or around £24 per year).
Therefore, to work out if saving money in a piggy bank is right for you, you need to determine whether you’ll save more because of the psychological factors involved. Your numbers will vary depending on how much money you put in your piggy bank each day, but if you believe that saving money in a piggy bank will make you save over £24 more than you would each year without keeping one, then go for it.
Piggy Bank Saving Tips
Money saving comes in many forms, from putting money away in a savings account to stock market investments. The right method for you is the one that best meets your aims and your budget.
If money is tight, maybe you're unemployed at this minute, or in a low paying job and you have out goings higher than your income can cope with, then saving money is a huge challenge.