Americans Giving Up Earnings on Cash

Here's an interesting statistic I found in the August issue of Money magazine:

More Americans use a piggy bank (42%) or change jar (65%) than a money-market account (35%) according to Capital One.

A few thoughts on this:

1. As a commenter recently pointed out, statistics can be manipulated to say almost anything, so it's hard to read exactly what's going on here.

2. That said, it appears that many Americans are using techniques to save money that aren't optimal. For instance, a money-market account pays about 5% or so per year -- a change jar's return is significantly below that. ;-)

3. Maybe this isn't a big deal. It could be that while a greater percentage of people use non-optimal savings methods, a greater percentage of the dollars saved are still in accounts like money-markets. We just don't know from what we're given.

4. So what's the action point? I think if you're saving a few dollars in a change jar, that's fine. We do it (to pay the kids now and then) and I don't think we're losing a fortune as a result. On the other hand, if you've got a few thousand dollars in coins and bills lying around, you'd be much better off putting them into an account where your money is working for you.

Comments

[JJ in Balt]

Saving your change can be fun and have a purpose!

While we are very good at saving $ in the right places, (High interest accounts, 401k, SEP IRA etc.,) we do have a place we put all of our household change (coins). Actually, I bought one of those coin rolling machines that sort the change into coin rolls.

Throughout the year, my partner and I "save" end of the day change. Come December, we use it to go out to a special dinner for our anniversary. We usually have anywhere from $150 to $200. Makes for a very special dinner but one that was "budgeted". It also makes for a great TIP for the individual who happens to be our server. Overall, some great holiday cheer! Could that $200 be "working harder" for us in a high interest account - sure, but it would not be as much fun. Just my thoughts on change jars.
-jj

[Mike]

No offense to Money Market accounts, but I have no problems finding a savings accounts that do better than most Money Market accounts. So, I've got no market account, but I do have a change jar with probably $5 in it and a high-yield savings account (not in the stats) with, um, more than $5 in it. I would have skewed the results a bit.

My $0.02 is that this stat has an agenda.

Mike

[Mike]

On a hunch, I went and looked at Capital One's website. Guess which of the following services they offer:
A) Checking Account
B) Savings Account
C) "High Yield" Money Market Account
D) All Of The Above

If you picked C, you'd be correct. I'm more convinced that this statistic has an agenda behind it.

Mike

[Patrick]

I too have a change jar containing a few dollars. Unfortunately, I don't have a piggy bank.

[Lord]

What do the people without piggy banks or change jars do? Leave it in their pockets? Leave it as tips? Donate it at the checkout? Make their spouse pay for everything?

[Josh]

I do the same thing as JJ does. I throw my end of the day loose change into a jar and then after it has been filling up for awhile and I think it is worth it, I cash it out and use it to do something fun. I think the statistic could be a little misleading considering piggy banks and change jars don't normally have enough money in them to be worth the effort of moving them to a money market account.