There are many children that will have a piggy bank or money box that they will use to save money. There may be some adults that save money this was as well. However, there may be some people that feel that it is not a good way to save money at all. It is therefore worth thinking about the pros and cons of saving this way.
Advantages of Using a Piggy Bank
Using a piggy bank can help to encourage children to save. Hearing money dropping inside and filling it up can be rewarding. Some piggy banks are even designed to make it more rewarding for children to use them, such a playing a tune or moving when money is put inside. A piggy bank will also give a child the opportunity to think about saving money. Parents can use it as an opportunity to explain to children about the benefits of saving money as well.
It will also encourage children to not spend all of the money that they have. They will get used to the idea that when they get money, they do not always have to spend it but they could save some and put it aside for later.
It can also be used to show children the idea of saving up for something. So if they want something that is more expensive than they can afford, they will be able to save up money, such as pocket money or money they have got for gifts, so that they can afford it in the future.
Disadvantages of Using a Piggy Bank
When you put money into a piggy bank it does nothing, this is compared to putting it into a savings account where it will earn interest. So, it can be wiser to save money in a bank account or once a piggy bank has some money accumulated in it to pay it into the bank so that you can start to get interest in it.
There are some people that make a mistake with saving. They will get a certain amount of money out of the ATM each week. Then when they have spare change, they will put it in a piggy bank and think that they are saving money. However, if they are not using a budget to determine how much they are drawing out of the ATM and how often, it will not help them save money at all. It would be better to spend that money and leave longer between drawing it out of the bank as the money in the bank might earn interest on it.
So, you need to think about whether you feel that using a piggy bank is a good idea. Perhaps for a child, it is a good way to get them used to the idea of saving money. However, also encouraging them to make sure that money is put into a savings account where it can earn interest is something which is important as well. It is also so important to make sure that you really are saving money. By just popping coins in a jar you are not saving money. You may as well draw out £20 from your savings account, change it into coins and put it in a bottle at home. This is not saving and hopefully everyone can see that it is not and therefore hopefully people will stop doing this sort of thing, but put money into a savings account instead, when they can afford to. It is also wise to compare interest on savings accounts to make sure that you get the best possible rate.