What to Do When the Piggy Bank Only Grunts!

Many families are finding things tight in the bank account. A lot of families don’t hear a rattle when they shake the piggy bank – instead it’s the deathly silence of “no savings”.

Newspapers continue to report that we’re spending at least 10% more than we earn. And yet there is a constant growth in the net worth of individuals, mainly due to properties increasing in value. But having equity in the property you live in, due to property values going up, is very different from having cash savings in the bank – money you can actually use.

Now, having equity in your property is great. But the issue is that many people are spending more than they’re earning, but are justifying it by the increasing equity in their home. They forget that all property around them is going up at the same rate, so really with their property rising in value they’re not getting ahead – only keeping up. I have come across many people who have reasonable equity in their home, but are spending more than they’re earning and so have large credit card bills and other debts that they’re struggling to pay off. When it comes to emergencies, or achiveing a goal, having increasing equity is not enough – we need to also have healthy bank accounts.

So what do you do when the piggy bank only grunts and doesn’t give you what you want?

In my observation of talking to many people in this situation I’m confident I know what the cause of the problem is. It’s an overweight list of expenses relating to lifestyle. Are you and your family guilty of this?

When was the last time you sat down and reviewed what you spend your money on? Come on, be honest. I’m the first to admit that it’s a painful exercise, and I know – I still have the scars from the last time we did it! But it is an exercise that you should do often.

The benefit is this: Your lifestyle spending should lose weight and your piggy bank should put on a few pounds.

Here’s the challenge for us all: Review your spending and find 3 things that you are not going to spend money on for the next 3 months. Take the money you would have spent on these 3 things and put it in a piggy bank. I encourage you to use a real piggy bank, so you can see the results. But if you don’t like that idea then set up a separate savings account (it must be one that has NO FEES at all – most banks offer these now), and watch how the balance grows.

At the end of 3 months you’ll be surprised at the extra savings you have sitting there, and you may even have some healthier habits as a result. That can’t be a bad thing, can it?

Phil Strong
CEO Wisemoney