Piggy banking involves splitting your money into separate “piggy banks”, each for a different purpose. This savings method makes it easier for you to set a budget for how much you want to spend on things each month and set aside money for important things like bills and rent.
Download a budgeting app
While piggy banking draws on an old school savings method, with current technology it’s easier to do than ever before! With all the different budgeting and personal finance apps available now, it takes little work to divide your money into different categories. And it’s especially easy with digital banking apps like Revolut and Monzo.
Revolut allows you to divide your money into different “Vaults” for various categories. Similarly, Monzo also lets you split your money into different “Pots” which can be used for anything you want.
Get a £20 welcome bonus when you spend your first £20 (T&Cs apply).
If you open an account with Revolut, you'll be able to set up Pockets (previously Vaults) to help you save for different purposes. In the app, you can select the name of your Pocket and its goal, whether that's a holiday or a house deposit. You can make regular payments into each Pocket, as well as opt for your spending to be rounded up and the difference transferred to your chosen Pocket. It's possible to set up Group Pockets too, to save for a common goal with friends or family. Additionally, there are separate interest-paying savings accounts you can open to help you save even faster.
Pros
Low overseas fees
Quick application
Earn cashback on spending
Set budgets for financial goals
Virtual cards for online purchases
Easy to transfer money internationally
Linked 'Junior' account available for one child
Cons
1% currency conversion charge on weekend spending abroad
Free cash withdrawals in the UK and abroad both limited to £200 per month
Cannot deposit cash or cheques into the account
Charged a fee to receive your bank card
Minimum opening balance
£0
Account fees
£0
Overseas card transactions
0% Mon-Fri (max. £1,000 per month)
Overseas cash withdrawals
0% Mon-Fri (max. £1,000 per month) conversion fee plus cash fee of £0 up to £200 per month
Open an account with Monzo and you can take advantage of Monzo Pots to help you separate your spending and budget better. You can give each Pot a different name for a different purpose and set yourself a savings goal, whether you want to save weekly or monthly. You'll be able to add deadlines to meet your goals, and use the round-ups feature to round up your payments to the nearest pound and transfer the difference to a Pot. Further benefits include the option to lock or hide a Pot in case you're tempted to spend from it too soon, and the option to set up a direct debit or standing order to come out of a particular Pot to pay bills.
Representative example: If you use an arranged overdraft of £1,200, you'll be charged interest at 39% EAR variable.
Pros
Easy to set up
Good for budgeting and categorising spending
Automatic saving feature
Fee-free spending abroad
Slick app with face login
Overdrafts and loans available
Cons
Free ATM withdrawals outside the EEA limited to £200,
£1 fee for depositing cash at PayPoints,
Maximum cash deposit of £1,000 every 6 months
No rewards program
Minimum opening balance
£0
Switch service guarantee
Yes
Account fees
£0
Overseas card transactions
0%
Overseas cash withdrawals
0% conversion fee plus cash fee of 0% on up to £400 per 30 days (3% thereafter)
Starling's current account comes with Savings Spaces where you can set aside money for different goals, whether you're looking to save for a holiday, a new car or home improvements. You can name each Savings Space and transfer money in and out as you need to. The Round Ups feature lets you round up your spending and have the spare change sent to your chosen Space. There's also a Split payment tool whereby if you receive a payment into your main account (including interest), you can split it and sort it into your different Spaces. Plus, it's now possible to create virtual cards to spend from one Savings Space only.
Pros
Free ATM withdrawals and spending anywhere abroad
Can deposit both cash and cheques for free
Spending insights and saving tools
'Settle up' feature to split joint bills
Pays interest on current account balance
Overdrafts and loans available
Cons
Lower ATM withdrawal limit than some other digital challengers
Before you start piggy banking go through your finances and make sure you can afford to cover the amount that you expect to spend monthly.
By balancing your budget, you ensure that you are earning enough to cover all your spendings. You need to evaluate your income and make sure it covers all your essential expenses (like bills and rent), and cut any costs if necessary to meet your expected monthly budget.
Set up different categories
Decide the different categories that you would spread your money over. There are no rules to this; you can have as many different categories as you like! Here are some categories to get you started:
Bills
Rent
Groceries
Travel money
Splurge money
Decide how much to add to each piggy bank
Go through your income and decide how much you’ll add to every piggy bank. Prioritise the different categories and decide which ones you need to add the most money to (like rent and bills).
It’s always good to overestimate how much money you should add to your piggy banks for things like bills and groceries, just to make sure you have enough to cover everything.
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