As ever on this website, we are not looking at wholesale changes to your lifestyle. Instead, we focus on the little things (the small steps) which make a huge difference over time. Today, let’s look at some piggy bank saving tips, outlining how to save money in a piggy bank.
Why Do We Save Money In A “Piggy Bank”?
During The Middle Ages, in about the fifteenth century, metal was expensive and seldom used for household wares. Instead, dishes and pots were made of an economical clay called pygg. Whenever housewives could save an extra coin, they dropped it into one of their clay jars. They called this their pygg bank or their piggy bank.
Interesting fact, huh, but no good explaining how to save money in a piggy bank. Before we explore the piggy bank savings tips, I think it’s important to consider the pros and cons of saving money in a piggy bank.
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, at Christmas, she empties the piggy bank. When she does, she deposits the contents into the bank.
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.
As far as the psychological positives, she also states that she is encouraged to save money in a piggy back. She really wants it to physically grow bigger and heavier. Just like bringing up a real baby piglet!
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.
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. My personal opinion is…it’s close!
Piggy Bank Saving Tips
- If you find saving difficult, or you’re inclined to spend your loose change more willingly than breaking a note, then save money in a piggy bank.
- Keep the fact that you are trying to grow your piggy bank in the forefront of your mind. It may seem weird, but you’ll find after a few weeks that when you are about to spend a small amount of loose change on something that you don’t need (say a chocolate bar), you feel like you are depriving your piggy bank it’s daily meal!
- Never empty your piggy bank haphazardly. If you do, it’ll quickly simply become a nice tidy way to store your money rather than being a money saving tool.
- By not emptying your piggy bank, you allow it to grow heavier and you will have a compound emotion towards it.
- However, you should be aiming to empty and place your piggy bank amounts into your real bank account on a scheduled basis (I would recommend every 6 months at most). If not, you will be losing out on too much compound interest.
- Placing a specific goal alongside your piggy bank can often help you increase the amount you save in your piggy bank. For instance, if you have a holiday coming up, say to yourself that you are saving in the piggy bank for that holiday – you could even name it Costa Del Piglet (or something more inventive) to help you make that connection.
- Don’t set yourself a monetary limit of what goes in. Many people save anything under 20p into a piggy bank for instance. However, all that does is tell your brain that a 50p can be spent. Effectively, you trick yourself into beliving that the 20p is worth more than the 50p!
- Buy a piggy bank that you are proud of – I’ve added some of my favourites below…