I had this same little lion bank as a kid. But no, saving it not a trap or a cage but is freedom!
Picture found at this etsy shop.
Over the weekend there was a USA Today article entitled "Don't laugh, the piggy bank strategy works" by Lewis Walker. He states that "wealth starts with a goal, discipline, and saving a dollar at a time" - bringing the idea of a classic piggy bank to mind. He goes on to say that "while piggy banks teach children the wisdom of thrift, adults often need to relearn childhood lessons. The best time to save money is when you have it. Excess debt can be ruinous."
Yes! And our "dream jar" is no different than a piggy bank.
Walker also mentions George S. Clason's 1926 book The Richest Man in Babylon in which Clason recommends that "when you earn money, peel off the top 10%, put it aside, save and invest wisely" (as paraphrased by Walker). [although this is just one of Clason's seven rules - another of which is control expenditures.] Paying yourself first is not a new idea and is one that many people put to use (i.e. the 10/20/70 method).
This article suggests that "paying yourself first" and prudently setting aside dollars in a piggy bank are mutually inclusive. And suggests that setting aside a percentage each month is end-of-story regarding savings. But in my experience automatically "paying yourself first" and being prudent with day-to-day expenditures are different actions and mindsets - but together they produce the best results.
Active v. Passive Savings
I categorize "paying yourself first" as a passive form of savings as it is a method that now is inherently non-cash based, digital, and automatic (think 401k contributions and internet banking). In our budget, "paying ourselves first" falls under my "out-of-sight, out-of-mind" grouping (our budgeting method HERE). Your paycheck is deposited, you transfer a percentage into savings, and you do so automatically without much thought - which is what is generally prescribed.
But in contrast, I feel that prudently setting aside dollars in a piggy bank is an active form of savings that remains inherently cash based. In our method, it is essentially "paying ourselves last." Importantly, dropping a physical penny in a bank or dollars into a jar requires a choice each time - spend this or save this? But with automatically setting aside a percentage each month, the whole point is that the decision is not burdensome and that saving is automatic. Personally, we grew comfortable and lazy when only "paying ourselves first."
Paying Ourselves First...and Last
This article suggests that "paying yourself first" and prudently setting aside dollars in a piggy bank are mutually inclusive. And suggests that setting aside a percentage each month is end-of-story regarding savings. But in my experience automatically "paying yourself first" and being prudent with day-to-day expenditures are different actions and mindsets - but together they produce the best results.
Active v. Passive Savings
I categorize "paying yourself first" as a passive form of savings as it is a method that now is inherently non-cash based, digital, and automatic (think 401k contributions and internet banking). In our budget, "paying ourselves first" falls under my "out-of-sight, out-of-mind" grouping (our budgeting method HERE). Your paycheck is deposited, you transfer a percentage into savings, and you do so automatically without much thought - which is what is generally prescribed.
But in contrast, I feel that prudently setting aside dollars in a piggy bank is an active form of savings that remains inherently cash based. In our method, it is essentially "paying ourselves last." Importantly, dropping a physical penny in a bank or dollars into a jar requires a choice each time - spend this or save this? But with automatically setting aside a percentage each month, the whole point is that the decision is not burdensome and that saving is automatic. Personally, we grew comfortable and lazy when only "paying ourselves first."
Paying Ourselves First...and Last
So we now "pay ourselves first...and last" and have seen the best results from doing so. Paying ourselves last being saving dollars from our weekly cash budget to drop into our "dream jar," in addition to automatically placing a percentage of our income into savings each month.
Some weeks we do need our full cash budget and that's okay (see HERE - that is why it is budgeted after all). But some weeks we simply do not and that is when we can save and "pay ourselves last." By paying ourselves last, we are making saving a priority from week to week which necessitates prudent spending.
Once we can budget the full percentage upfront, we will move onto the next goal - again saving dollar by dollar through "paying ourselves last."
The Mindset Required
The Mindset Required
And the frugal mindset that is made habit by paying ourselves both first and last
As opposed to the attitude of we have paid ourselves first and are now free to increase our lifestyle/consumption equal to what remains of our income. This is the thinking the we had fallen victim to in the past. We had paid our percentage, box checked, out-of-sight and out-of-mind and were okay with spending the rest of our income. But in our experience, only passively saving did not make for a truly prudent heart. And we weren't making big strides toward reaching our financial goals.
As opposed to the attitude of we have paid ourselves first and are now free to increase our lifestyle/consumption equal to what remains of our income. This is the thinking the we had fallen victim to in the past. We had paid our percentage, box checked, out-of-sight and out-of-mind and were okay with spending the rest of our income. But in our experience, only passively saving did not make for a truly prudent heart. And we weren't making big strides toward reaching our financial goals.
Do you also pay yourself first and last? In your experience, do these promote different mindsets?
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