Why One Piggy Bank is Not Enough


The piggy bank is without a doubt the most common gift children are given to help them make their first steps into the world of money.

Some of us will remember the days when a bank account was automatically created for us when we first started school.

You would bring in your handful of coins each week to be deposited into your account and have a stamp added to your pink Snow White bank book. This introduced you to the concept of money and the banking system at an early age.

Well the days of the bank book are no longer – this means as parents, grandparents, aunties and big sisters we have a great responsibility and opportunity to help develop good financial habits in the children that we know and love. And when it comes to teaching financial literacy, starting young with simple rules is the way to go.

The piggy bank is without a doubt the most common gift children are given to help them make their first steps into the world of money.

It often comes with an explanation of the importance of saving. However positive this gesture may be, it’s generally missing a critical element: more than one piggy bank!

Money has different purposes. This is illustrated in the financial accounts of your business, which require for short-term and long-term needs to be separated. (Centro’s infamous misclassification of $2b of current liabilities as non current underscores the point.) This reality is equally true at home – some of our cash must be allocated to daily expenditure, some to longer term projects or needs.

Children who learn these concepts and how to use money for different purpose early on, will develop good habits that will last a lifetime. A great way to help them integrate this knowledge is by using a system we call the ‘three money boxes’ – developed by my husband and tried and tested on our son! By having not one but three piggy banks or money boxes, children gain the knowhow to use money for different needs.

In this system the first money box is kept for savings to buy birthday and Christmas presents for the child’s family, teachers and so on. The second money box is for their day-to-day spending, like an ice cream or a Lego Mini Figure. The last money box is for long-term savings and there is no day-to-day access to it. As the child’s savings increase, the third money box can be replaced with a bank account, thus slowly introducing them to the banking system.

Educating kids about the basics of the latter is also part of teaching financial literacy. A key aspect is to explain the distinction between cash and credit cards and the importance of saving money instead of relying on debt. The final step is to guide the young financier in investing these funds into shares. From a young age, we see money changing hands and get to touch it. This is a crucial step in helping us to understand what cash is. But as mothers, grandmothers, sisters and aunties, we also need to educate children on how to use money.

Good financial literacy helps us to make smart financial decisions that can impact our business success, the opportunities we can pursue and our quality of life. Kids who learn how to use and save money wisely from a young age will develop good habits for the rest of their lives. The good news is, there is a very simple and great way we can start teaching our children financial literacy…and that is by taking that one piggy bank and multiplying it by three.