3 Financial Lessons Kids Can Learn from a Piggy Bank

piggy bankWhile adults constantly seek ways to improve their own financial knowledge and educate themselves, sometimes it’s easy to forget the importance of imparting this wisdom onto children.

As a parent, it’s imperative to teach one’s children about financial wisdom, such as being thrifty, saving in order to buy things, and learning wealth should come from a good work ethic.

Fortunately, one of the easiest, and fun, ways to do this is through an age-old item, the piggy bank.

In the era of electronic devices, such as iPads, portable gaming devices, and cell phones, piggy banks are still an effective, creative, and simplistic way to teach your kids good financial habits.

The first piggy bank I remember was my dad’s; it was the old-fashioned glass piggy bank❠that he would plot his spare change into every time he emptied his wallet. Every month or so, the pig would weigh as much as a shot-put.

For some reason when I was a little kid I thought it was the coolest thing at the time and wanted one of my own.

It was one of the few gifts my parents weren’t reserved about getting for me.

Through the years, I had an assortment of piggy banks,❠varying from a Thomas the Tank Engine (yes, I went through a Thomas the Tank Engine phase like every other five-year-old boy) to a small safe-like lockbox that required a combination code and key. Though I don’t use them for any kind of serious saving, I still use a bottle with an electronic counter, as well as an old wine bottle.

As a kid, I used them to have save money to buy things from garage sales when my parents informed me they wouldn’t pay for them. This isn’t to say they didn’t pay for anything. On most things, they did. But when it came to small, manageable purchases, they encouraged me to save and buy it myself.

Although we live in the 21st Century, old school piggy banks can still help kids understand complicated matters about money in simple terms. The small bank-like device on a shelf in my nightstand certainly helped build my basic understanding of finances.

Here are three financial lessons they can learn:

1. In order to take out money, someone has to put in money; it doesn’t come out of nowhere

My piggy banks taught me early on that money originates from somewhere, and that somewhere was always from a person who had worked for it, whether it was a grandparent, my dad or mom, or myself. For me to take money out to spend, I had to put money in there first. Even when some of the money came in the form of presents or gifts, I realized that someone had worked to earn it. It didn’t come from a bottomless well or fountain (or a massive printing machine). At the end of the day the money did not come out of thin air, nor was I entitled to something merely because I wanted it.

2. Saving even in small amounts adds up

Because it’s visual and organic, rather than a mere number on a screen, it’s easier for kids to understand how savings can accumulate over time if they put into it. They see the piggy bank get heavier and heavier, or the space fill up with coins and dollar bills.

For a precocious six-year-old, it can be fun to watch their savings grow from that first dollar to a hundred dollars. While this amount doesn’t seem much to an adult, who buy and save in the hundreds or thousands of dollars, to a kid five and ten dollars are a lot when saving is done in relatively small amounts.

Saving also gives kids a sense of accomplishment and ownership because it requires them to be disciplined. They have to have self-control against the natural inclination to spend, which comes in handy later in life.

3. You buy only what you can afford

The inherent purpose of a piggy bank is to save up enough money buy something; you  aren’t  supposed to buy and then save up to pay off a loan. Unlike Lloyd Christmas from Dumb and Dumber❠kids  aren’t  supposed to put I owe you’s❠into a piggy bank; you can, but it defeats the purpose. You put in money you already have earned.  Or even if it’s Halloween coming up, you can do these events with money you’ve saved.

It teaches kids that when they buy something, they don’t plunk down a credit card and delay hard work in favor of instant gratification. They learn to be responsible with their money, because they know exactly how much they actually have, and some electronic piggy banks can count it for them. Kids also become familiar with the concept of only paying for things that are affordable, i.e. things they have the money saved up for.

The concept creates a solid rewards system, because the kids know if they save up they will be able to buy something for themselves, which also teaches them self-reliance and independence. Ultimately, they become more financially mature than children whose parents simply pay for whatever they want rather force them to save until they have the sufficient amount.

Additionally, piggy banks can encourage them to make wise purchasing decisions, and what they buy will have gain greater value to them. If a child has to wait and save to buy something, they will make sure the money isn’t wasted.

photo by Tax Credit

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Written by TJ

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