There are many ways to save up money and there are some people that choose to put pennies in a bottle to save up. Once the bottle is full they take it to the bank and ask them to either exchange it for notes which they will take and spend on something or they will pay it into their savings account. There are many reasons why this is actually not a good way of saving and so you should consider using a different method.
- You only save certain coins – by saving in a bottle you will only be able to save certain coins. Some people might decide to literally only use it for pennies, perhaps only coppers, maybe for fives or silver money or for all change. Whatever it is, you will only be saving certain types of coins. As coins hold very low values it means that you will not be saving very much at a time. Even if you put a few coins in a day it would not really add up to very much money over the course of a month or even a year.
- You don’t spend any less – saving can often be an exercise where you reduce your spending so that you can save money. If you just put a few coins from your pocket into a bottle you are not making an effort to spend less money. If you put a significant amount of money into a savings account each month you will have to budget to make sure that you have enough money to do this. This will help you to actually manage your money better and you will save significantly more money.
- You don’t get interest on it – when you put money into a bottle you get no interest on it. When you pay it into a bank account you will start earning interest on it. Although the interest rates are very low at the moment, it is still better than getting nothing at all. It is also far more secure in a bank account as there is far less chance of it being stolen than if you keep it in a bottle at home. You may even find if you leave it at home that family members will borrow it and then not pay it back!
- It is easy to dig into it – in fact if it is in a bottle at home it will be easy for you to dig into as well. When you have money in a savings account it is not so easy to get hold of. Although you can draw it out or transfer it, this is more effort than tipping some out of a bottle. Therefore, you could find that you are more likely to have a bigger amount of savings if you use a bank account compared to a bottle.
So, it can be a lot better to actually use a savings account rather than just putting coins into a bottle. You might think that you are saving money this way but it will not grow very fast and you will not get any interest on the money. It can be far better to make a transfer each month into a savings account. This need not be a great deal of money but it will all add up and will be a much better way to save. If you get into the habit of spending those pennies and other small change, it will not weigh down your pocket, wallet or purse. If you do want to make a big effort to save then it could be much more effective to keep a close watch on your spending and only buy what is necessary so that you have money left over that you will be able to save. This can allow your savings to grow much more quickly compared with just popping some money into a bottle. It is wise to compare savings accounts as well as the interest rates will vary between them. Sometimes if you have a savings account with the same bank you have your current account with you can get more interest, but this is not always the case and you may still be able to get better interest elsewhere. It is worth investigating as it can make a significant difference. It is also worth thinking about whether you want to be able to draw the money out whenever you like or if you are prepared to tie it up. If you pay regularly into account but do not withdraw form it, you might be able to get more interest or get paid a bonus. These types of accounts are different to instant access ones and can pay significantly more interest. Consider whether they would be useful to you depending on whether you feel it would be better to tie your money away and make it hard to access, perhaps if you are saving for the future or if you need to get to it easily if you are savings for short-term purchases.