We were all taught some forms of methods or systems to save and accumulate money by our parents or even grandparents. Me growing up, especially in Singapore. I was gifted many Piggy Bank in my childhood and was told to keep some coins or notes aside for Emergency usage in the Future. I don’t have much in the past, but I did it anyway just for the fun for it. I recalled fondly that my Piggy Bank always goes Broke when it comes to my school holiday when I have time away from school and would use how little or how much I saved up to buy treats or candy.
Fast track to current time, I have internalized and have come up with my own version of Piggy Banking (now it’s more like Bank Accounts for ease of usage/tracking and of cause security reasons too) which help me greatly with budgeting and most importantly setting up an Lifetime Habit of Discipline and Systematically putting money aside for specific reason. I found it truly empowering and liberating to put for reason & usages for the funds I kept aside even before spending or accumulating them.
1. General Piggy Banking for Necessities and Day to Day Utility( Account No 1, 50-60% ) - This is your Salary/Paycheck account. Where u pay for Electricity, Mobile Bills, Mortgages, Food & Coffee, Date Night, Children Education & allowances, Pets maintenance, Personal Care, Health, Accident & Critical illness Insurance etc. These accounts tend to take a big chunk of your Salary. I would say no more than 50-60% for a start. But in times, this account usages should fall when your mortgages payment reduces, children is no longer dependent on you, or when your Salary increases too.
2. Piggy Banking for Long Term/Short Term Saving Needs (Account No 2, 20-35% ) - This is the account which u put your Salary in and let it grow for multiple specific reasons or usages. So, example for Short Term Saving needs: Emergency or Rainy-Day Funds, typically 3-6x your monthly general expenses. Home renovation expenses, Wedding Plan Budgeting, Car Purchase, or Even Business Head start fund can all be considered as Short-Term Saving needs. Such specific short-term saving needs usually is fulfilled, and the accounts is drain. Thereafter we moved on to the next short-term saving needs or until all short terms needs is being provided for. Next up, which is the Long-Term Saving Needs, this is where u put in funds, and it should not be touched for decades (I really meant it. DECADES!!!) This account is Vital to your overall financial health and future. This is where u give your $ the chances to grow and accumulate for your retirement. As every one of us have limited working lifespan & time. Some maybe longer, some maybe shorter. We can’t simply plan to work for the rest of our life even if we enjoy our work. That’s just not possible. Thus, this Long-Term Saving Account is Vital for our Retirement Happiness and Lifestyle post our Working Days. For these 2 accounts u may use instruments such as Investment into Equity, Mutual Funds/Unit Trust, ETF, Endowment or Whole Life policy, Sg Government Bonds, or even Fixed Deposit Accounts. All based on your personal risk tolerance. I would say these 2 accounts will take about 20-35% of your Salary/Pay Check.
3. Piggy Banking for Play and Self Rewarding needs ( Account No 3, 5-10% ) - this account is the most Fun account and u should get creative towards rewarding yourself. This account I would say will help many of us to keep control of our Inner Spending Devil, or the new trends of wanting things Now. It’s also about slight delay gratification and rewarding yourself handsomely, and in a meaningful way. I know it’s hard to keep working so hard and never Play or reward yourself. It’s like walking inside an underground dark tunnel and never seeing the light literally. I’m quite certain most of u would also agree with me that, we can’t keep playing right. Because I personally feel, if u play and reward yourself all the time, then it would lose the true meaning behind it. And it becomes less exciting for oneself too when it’s time to let loose and truly enjoy yourself. Thus, I felt Play account is important to be managed on a timely basis. And it should only be activated and completely Drain to Reward oneself when the time is right. When it’s managed successfully and efficiently, this person will feel the benefits of having this Play Account and will want to receive such rewards again as he/she continues to work hard for it. I would recommend setting aside 5-10% for Play Account. And only use it for something truly rewarding for oneself. Example, bringing loves one together for a dream holiday, getting yourself that expensive gift/watches/designer bags/jewelry, going for the most luxurious Spa treatment, enjoying the most delicious food in the best Michelin restaurant, getting the most exciting or latest toys/computer/camera. Or even just spending without a care in the world for just that 1 Day. I get excited just thinking about this all the time. 😁
Final thoughts, why everyone should be trying out these Piggy Bank Systems. Because personally I do feel that everyone’s of us does need a Plan of action that is simple enough to follow. Without a simple course of action or Plan. We are setting ourselves to fail (maybe), & I certainly won’t follow through if it’s too complicated. Ultimately, it’s the good budgeting habit that’s formed (forced upon maybe from the start for a good reason) that helps me navigate stress free through my Financial Aspects of Life.
I sincerely hope this method of budgeting helps u too