Updated: November 11, 2020
If I remember it right, it was my aunt who gave me my very first piggy bank, and it was a holiday gift. When I asked what it was, she said, “It’s where you should keep all the money you’ll receive this Christmas.”
I did not fully understand why, but I did it anyway. And by the start of the new year, she and my mom opened a “kiddie savings” bank account from all the money I had in there.
Immediately after, my aunt then told me, “From now on, whenever you have money left from your allowance, put them in the piggy bank, and then we’ll bring the money to the bank again when it’s full.”
“Why?” I finally had the courage to ask.
“Because you should learn how to save,” she answered.
“Why?” I asked again.
“So you’ll always have money when you need it,” she replied.
Needing money is not something I thought about as a 7-year-old, so I never fully understood what my aunt meant by what she said. However, I did follow her advice, and would always make sure I had money left from my allowance at the end of the day for my piggy bank – but not because I wanted to save, but because I liked hearing the clanking sound of the coin whenever I put one in.
Most of us probably had the same experience as a kid. We were given a piggy bank and told that it’s good to save. But we never really fully understood why we need to do it, and the usual reason we got was that it’s “for the rainy days”.
That’s why today, I’d like to improve on this childhood lesson and change how kids should begin learning about money and saving.
And it all starts with a simple task… to give your child three piggy banks instead of just one – one for saving, one for spending, and the last one, for charity.
The First Piggy Bank
Teach you child to pay himself first by “forcing” him to save as soon as he gets his allowance. Suggest a minimum amount, perhaps 10% of what he’s receiving, but let him ultimately decide how much he wants to save.
When he asks why he needs to do this, tell him that it’s for buying things he uses in school that gets lost or broken. For example, if he misplaces his pencil, then that’s where the two of you will get the money to buy a new one.
This will give him a more concrete understanding of what “the rainy days” are and why he needs to save money.
The Second Piggy Bank
As a kid, I’m always happy when there’s school because I’d have an allowance to buy White Rabbit (with the magic wrapper). But weekends were a problem because it meant I’d have no money to buy my favorite candy.
But then I figured, if I buy only a couple of White Rabbits instead of the usual three, I’d have money left to spend during weekends. It sounded like a good plan and so that’s what I did.
However, when I get home, my mom would always take the coins and put it in my piggy bank. When I said that it’s for candies over the weekend, she’ll tell me that it’s bad to always eat candies and I should save my money instead.
Let your child experience the joy of spending by giving them the freedom to buy whatever they want from their allowance. There’s no need to tell them to “save their money” because they’ve already done that at the start.
Instead, encourage them to use a second piggy bank to safe keep their spending allowance. Tell them that unlike the first piggy bank, they can take money there anytime, and they can spend it on anything they like.
Use this opportunity to teach your child the value of delayed gratification, and show how they can afford chocolates and ice cream (the more expensive stuff) if they don’t spend all their allowance on candies, and save part of it every day.
The Third Piggy Bank
Despite being the third, this piggy bank is also used at the start, together with the first one. Likewise, suggest an amount but let your child decide how much he’ll put in his charity piggy bank.
Saving the same amount as the first piggy bank (around 10% of his total allowance) is a good start, as it gives him 80% of his full allowance to be allotted for spending.
When he asks what the money he puts in here is for, tell him it’s for helping other people. He can drop the coins in donation cans at fast-food restaurants, or save them the whole year to buy toys to give street children during Christmas.
He can spend it on whatever he wants, as long as it’s for others and not for himself.
Teach your child to be generous, and they’ll learn that being rich is not just about being able to afford the things you need and want, but more importantly, it’s having the means to help others in their times of need.