There are many ways to save up money and there are somepeople that choose to put pennies in a bottle to save up. Once the bottle isfull they take it to the bank and ask them to either exchange it for noteswhich they will take and spend on something or they will pay it into theirsavings account. There are many reasons why this is actually not a good way ofsaving and so you should consider using a different method.
- You only save certain coins – by savingin a bottle you will only be able to save certain coins. Some people mightdecide to literally only use it for pennies, perhaps only coppers, maybe forfives or silver money or for all change. Whatever it is, you will only besaving certain types of coins. As coins hold very low values it means that you willnot be saving very much at a time. Even if you put a few coins in a day itwould not really add up to very much money over the course of a month or even ayear.
- You don’t spend any less – saving canoften 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 makingan effort to spend less money. If you put a significant amount of money into asavings account each month you will have to budget to make sure that you haveenough money to do this. This will help you to actually manage your moneybetter and you will save significantly more money.
- You don’t get interest on it – when youput money into a bottle you get no interest on it. When you pay it into a bank accountyou will start earning interest on it. Although the interest rates are very lowat the moment, it is still better than getting nothing at all. It is also farmore secure in a bank account as there is far less chance of it being stolenthan if you keep it in a bottle at home. You may even find if you leave it athome that family members will borrow it and then not pay it back!
- It is easy to dig into it – in fact if itis in a bottle at home it will be easy for you to dig into as well. When youhave money in a savings account it is not so easy to get hold of. Although youcan draw it out or transfer it, this is more effort than tipping some out of abottle. Therefore, you could find that you are more likely to have a biggeramount of savings if you use a bank account compared to a bottle.
So, it can be a lot better to actually use a savings accountrather than just putting coins into a bottle. You might think that you aresaving money this way but it will not grow very fast and you will not get anyinterest on the money. It can be far better to make a transfer each month intoa savings account. This need not be a great deal of money but it will all addup and will be a much better way to save. If you get into the habit of spendingthose 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 bemuch more effective to keep a close watch on your spending and only buy what isnecessary so that you have money left over that you will be able to save. Thiscan allow your savings to grow much more quickly compared with just poppingsome money into a bottle. It is wise to compare savings accounts as well as theinterest rates will vary between them. Sometimes if you have a savings accountwith the same bank you have your current account with you can get moreinterest, but this is not always the case and you may still be able to getbetter interest elsewhere. It is worth investigating as it can make asignificant difference. It is also worth thinking about whether you want to beable to draw the money out whenever you like or if you are prepared to tie itup. If you pay regularly into account but do not withdraw form it, you might beable to get more interest or get paid a bonus. These types of accounts aredifferent to instant access ones and can pay significantly more interest.Consider whether they would be useful to you depending on whether you feel itwould be better to tie your money away and make it hard to access, perhaps if youare saving for the future or if you need to get to it easily if you are savingsfor short-term purchases.