The Money Jar Trap
By Jeffrey Strain
Hundreds of thousands of people place their extra change into a jar or bank
every night when they return home thinking that they are saving money. In
reality, the dynamics of saving coins has changed over the last 10 years so
that by placing your extra coins in a jar, you may actually be losing money.
This is the new money jar trap.
The money jar has been a classic way for people to save money for
generations. The concept was easy. After coming home for the day, you simply
empty out your pockets and put the coins into a jar. When the jar was full,
you take it to your local bank, have the coins counted and place the money
into your savings account. While this sounds simple enough, the savings
generated in the coin jar may not be worth their face value depending on how
you redeem the coins.
The problem with the money jar game is that banks and other enterprises have
figured out that they can charge you for taking your change. If there is a
way to make a buck, you can be sure that banks and others will try to take
it.
Take the convenience of changing your coins at a grocery store. CoinStar and
other businesses will take your change and give you a receipt that you can
use for your grocery shopping, but they'll also take a huge fee to do so. In
effect, you are trading the face value of your coins for something worth
less than face value.
More and more banks are also beginning to charge you to count coins if they
will accept them at all. With the current rates that banks are paying on
savings accounts, you'll likely have to leave the money your received for
your coins in the bank several years just to break even with what you
initially had.
What this all comes down to is that for many, keeping a coin jar is the same
as losing money. Where it once was a great way to add to your savings, it
has become as wasteful as keeping a balance on your credit cards. We have
come to a time where the coin jar can actually cost you more money than you
save.
There are a few steps that you can take to make sure that you aren't
actually losing money when you think you are saving it. First, you want to
make sure never to have your coins changed at a grocery or similar store. By
doing so, you will automatically have around 10% of your money subtracted
for fees.
Before you take your coins to your bank, make sure they don't charge any
fees for taking the money. The policy for banks varies widely. Some will
charge for loose coins, but won't charge if you roll the coins yourself.
Find out what charges exist and if any do, consider switching banks. Credit
unions are usually better at not charging fees for taking coins than banks.
If you can't find a bank that will take coins without charging you, then use
the coins in your everyday use. You're much better off doing this that
letting them sit in a jar where they will ultimately lose money for you. You
can amend the money jar game to benefit your savings if this is the case.
Instead of saving coins, move up to $1 bills for your money jar. In this
scenario, you'll be doing exactly what you have been doing, but you'll be
saving $1 bills instead of change. You don't spend any $1 bills you receive,
but any coins you receive are fine to use. That means all purchases have to
be made with coins or large bills ($5, $10, or $20 dollar bills). At the end
of the day, you place all your $1 bills into your savings jar. Since banks
will not charge you anything to deposit $1 bills, you avoid the fees your
would get for the change and save even more money than with coins.
If you think that changing the game will keep you from saving, another way
to change the coins is to take them to your local post office and use them
to buy stamps out of the vending machines there. By switching the coins for
stamps, you get 100% value for your coins which is better than paying fees
to have the coins switched to bills.
In the end it's important to remember that coins are legal currency and you
can get full face value for them by spending them a little at a time. While
a large amount of coins can be troublesome, there is no reason to pay a fee
to have the coins deposited.
Copyright (c) Jeffrey Strain. He is owner of
http://www.savemoneygames.com -
a website dedicated to decreasing your debt by playing fun, money saving
games.