What's better: a piggy bank or a savings account?
Both the piggy bank and the savings account have their role to play for putting money aside; each one just serves a very different purpose. Let’s see what:
The piggy bank
Some people empty every evening the loose change in their wallet into their piggy bank, The basic idea behind the piggy bank is that coins can go a long way.
Once the pig’s belly is full, it’s usually opened; money is laid out on the kitchen table, counted and then spent (on that gift you always wanted, as holidays pocket money…) or given (to your children, grandchildren or a preferred charity). Nothing prevents you from putting the piggy bank’s savings into your savings account!
The visual aspect of seeing the heap of money after the savings exercise is very rewarding. Piggy banks are an excellent educational tool to help young children perceive the benefits of savings.
The savings accounts
The savings account has some key advantages when it comes to storing money safely and for the medium to long run – whether it is to save for an expensive dream, as a reserve for unforeseen expenditures or simply to accumulate wealth for old days or left behinds.
The savings account helps to (partially) compensate for the value loss due to inflation and if interest rates rise again, even to add to your wealth.
A savings account is a very safe way of storing money. Banking regulation protects your deposits in a much more effective way than your alarm system protects your valuables from robbery or home jacking.
Next to the traditional savings accounts there are other forms of savings like the home saving scheme (Bausparvertrag), pension saving plans or insured saving plans. Some of them have very interesting tax incentives and offer financial solutions related to home owning, pension compensation, protecting children, etc.
Money that is not spent and left outside of the banking system, “under the mattress” for instance, will have an extremely limited contribution to an economy’s growth and prosperity. If savings are put aside on a bank account, the bank can (partially) lend this money to those who needed for their investments.
So let’s not slaughter the piggy banks just yet! They have their charm, they are useful for saving small change and have an educational advantage. Once you want to save more than the odd pennies, think about opening a savings account: it is safe, pays interest, can have tax advantages in some of its forms and is good for the economic development of our community.
Every year, it is the same old story: we have to fill in our tax declaration. For many of you, this annual exercise is like a chore. It is a pity because a tax declaration, correctly optimised, can save you money by reducing your taxes.
An automatic savings plan (aka ASP) is a standing bank transfer order that transfers money from your current account to your savings account on a fixed date.
You want to improve the return on your savings and make your first steps in the investment world but you don’t know how to do it? Why not trying regular investments? This financial solution is to invest on a regular basis (every month or every quarter) the same amount of money, fixed in advance, in an investment fund. Here are the main advantages.