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.
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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. |
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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.
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