Piggy Banks to Bank Accounts
Learn safe places to keep savings and how a savings account can help money grow.
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Why piggy banks to bank accounts matters
A piggy bank is a good place to start saving. You put in $5, it stays as $5. You put in $20, you have $25. Simple, safe, easy to check.
But a piggy bank has one limitation: it doesn't grow. The money just sits there.
A savings account does everything a piggy bank does, plus one extra thing: it earns interest. The bank pays you a small percentage of your balance for keeping your money there. The amount is small, but it's free — money you get just for saving.
How interest works
Say your savings account pays 4% APY (annual percentage yield — the yearly rate).
- $100 saved × 4% = $4 interest after one year
- After one year, you have $104 without doing anything extra
- Next year, you earn interest on $104 (not just $100), so it grows a tiny bit faster
This is called compound interest — interest on top of interest. For small amounts it's a small extra. For bigger amounts over many years, it adds up significantly.
Why bank accounts are safer than home
Cash at home can be lost, stolen, or damaged by fire or flood. There's no getting it back. Money in a bank is protected by government deposit insurance — in the US, the FDIC insures up to $250,000 per account. If the bank had serious problems, the government would step in to make sure depositors got their money back. No insurance programme covers cash under your mattress.
What a savings account can't do
A savings account isn't a spending account. You're not meant to dip into it regularly. Some accounts limit how many withdrawals you can make per month. This is actually useful — it keeps the money separate from your everyday spending and makes it harder to accidentally spend your savings.
What to remember
Starting a savings habit with even a small amount matters more than how much you start with. $5/week in a savings account beats $5/week in a piggy bank because the savings account earns interest and keeps the money separate from your daily spending temptation. The habit of moving money to savings regularly is the most important step.
Savings goal
Months to goal: 17 (~1.4 years)
Interest earned (approx.): $69
Timeline
How to think it through
Three places to keep money, ranked by what they offer:
- Piggy bank / home: No interest. No protection. Easy to raid. Good for very short-term or pocket money.
- Savings account: Earns interest (usually 4–5% at online banks). FDIC insured. Slightly separated from spending. Best for medium-term savings.
- Investment account (for much later): Higher potential returns. Some risk. For long-term money you won't need for years.
For kids saving toward a goal, a savings account is almost always better than a piggy bank.
Fun fact
The first piggy banks weren't actually shaped like pigs. In medieval Europe, cheap orange clay called "pygg" was used to make small jars where people stored coins. When English potters were asked to make "pygg jars," they made jars shaped like pigs instead — and the name stuck!
You have $60 saved in a piggy bank at home. Your mum offers to help you open a youth savings account at her bank.
What are the benefits of moving your $60 to a savings account?
Practice the idea
Which choice best shows understanding of piggy banks to bank accounts?
A student faces moving savings from home to a bank. What is the smartest first step?
What can a savings account do that a piggy bank at home cannot?
Why is money kept in a bank generally safer than money kept at home in a piggy bank?
Bring it into your life
Talk to a parent or guardian about opening a youth savings account if you don't already have one. Even $10–$20 is a real start. Ask what interest rate the account pays. Then check: if you saved $100, how much would you earn in a year at that rate? Understanding interest — even on small amounts — prepares you for much bigger savings decisions later.
A savings account does everything a piggy bank does, plus it earns interest — the bank pays you a percentage of your balance for keeping your money there. A $100 savings at 4% APY earns $4 in a year automatically. Bank deposits are also protected by government insurance (up to $250,000 in the US), unlike cash at home. Moving savings to a bank account is one of the first steps in making your money work slightly harder.