Sat | Dec 10, 2016

The importance of the piggy bank

Published:Thursday | November 6, 2014 | 12:00 AM

Piggy banks have always been fun, but now many parents are taking them more seriously because they have recognised the importance of using them to teach children to save.

The piggy bank encourages saving because it provides children a physical place to store their money. And, unlike a savings account, which is a more difficult concept for many young children to understand - the piggy bank is tangible and the funds are readily available. Plus, counting the money will lead to saving more. The whole process allows the child to experience the satisfaction of saving money at a very early age.

Parents should make adding to the piggy bank a weekly ritual, especially after a child begins to receive an allowance. Both child and parents must agree on a portion of the allowance which will be dedicated to the piggy bank. Parents can then use the piggy bank to help their child set financial goals. With a little guidance from an adult, the child can dream and plan about when and how to spend the money.

Especially for young children, it's probably best to select a piggy-bank goal that can be attained within a few weeks or months, as kids don't have the patience that adults have. The goal can become more ambitious as the child matures.

The piggy bank can be a first step in creating a 'money-smart child'. It can act as a springboard for good saving and spending habits as well as the precursor for savings or investment accounts that earn interest.