Smash that Piggy Bank (Part 1)

Save first and spend the rest

Piggy Banks (or money boxes) have been around since coinage began and we see companies use them to identify savings products.

However, I believe that we should smash our Piggy Banks as they encourage us to approach saving in a way that destroys our chances of success.

On my seventh birthday, my Grandfather gave me a ceramic pig; a Piggy Bank.

“Thank you, Grandad”, I said.

I would rather have been given a football, but not wanting to appear ungrateful, I thought that this polite response was best. 

Whilst I had said the right words, my face must have betrayed my true feelings My Grandfather smiled warmly at me and chuckled.

“Would you have rather received something else for your birthday, young man?”

I felt my face turn red with embarrassment at being found out and I didn’t have the courage to say anything.

“Pick up the piggy and shake it!” instructed my Grandfather.

As I lifted the Piggy Bank and shook it, the joyous sound of coins jingling together inside it was a magical discovery.  And it turned out that there was enough money to buy myself that football, some comics and sweets too. 

I should have smashed that Piggy Bank.  Not in front of my grandparents, of course.

By giving me a Piggy Bank, my grandparents were hoping to encourage me to develop the habit of being thrifty with my money.  The Piggy Bank was to encourage me to save my pocket money and buying myself sweets with what was left, so that I might have a bigger pot of money when I needed it. 

So, here is the problem: I was spending first and saving as an afterthought. 

What I should have been doing was saving first and spending what I had left. Taking control of my money,

I had no idea how much money was in my Piggy Bank at any one time and when I did want to buy a present for somebody, I usually found that I did not have enough to buy it.  How much I put in my Piggy Bank every week would vary.  And some weeks I put in nothing at all.

My Piggy Bank was also a bit like a golden egg in my mind.  When I hadn’t opened it for some time, I imagined that there was going to be this large pot of money there.  In reality, there wasn’t. 

And because I had no control over my money, it never was there when I needed it. 

If you don’t budget and manage your money, you can guarantee that you will be disappointed with what you have left.

Smash that imaginary Piggy Bank and you can start to think differently.

Here are a few tips.  Try writing down your answers. 

• Why save money?  Think ahead. Having a purpose to save money will help motivate you

• Where do I spend money?  Knowing where you spend your money is crucial.  Budget for what you need to spend, this week, this month and this year.  Can you account for all that you spent last week?  If not, are you spending money on impulse and then forgetting about it?  Are you spending money on things that you don’t really need or want?

• Emergency Fund – the unexpected often happens.  Think about putting aside cash for any emergencies. 

• Repeat – By doing the above, you are budgeting for your future and creating an incentive and motivation to save for your future self. 

Budget for how much money you need for essentials and then work out how much you can put aside for another day. 

Save first, then spend! I promise you that your future self will thank you for it.

A blog post by Philip Robinson

Philip is a Senior Wealth Manager at Mardon Financial Advisers Ltd and an Education Champion on the My Personal Finance Skills programme delivering free workshops in schools/colleges.

Views expressed above are his own and do not constitute advice

For more on the above and other money subjects, check out the Your Money Matters here.