SmartyPig Teaches Your Children About Savings For Financial Goals
By Pinyo • Mar 24th, 2008 • Category: Reviews and InterviewsYesterday I stumbled upon SmartyPig. It is an online piggy bank where you could set up savings goals, and invite family and friends to contribute to your account. While your savings is accumulating, it’s earning a competitive interest rate of 4.30% APY. Once you reach a savings goal, you can choose their SmartyPig MasterCard® Debit Card, or Retail Gift Card (the gift car adds a 5% bonus on top of your savings). There is a neat video on their home page that explains all of this.
Highlights
Although SmartyPig pitches itself as piggy bank for grown ups, I think it’s even better for children. Specifically, I think the underlying theory of this tool is very powerful. It has many valuable financial management concepts that children could learn. For example:
- Saving money to buy what you want, and not relying on credit card to fund the purchase.
- Using well-defined goals to achieve financial objectives — i.e., how much, when, and how.
- Leveraging regular contributions to make savings goals achievable.
- Investing — They could see their money grow and learn the value of compounded growth.
- Decision making — Is the limitations that come with the gift card worth the 5% bonus, or should they pick the more flexible debit card.
Lowlights
Unfortunately, when I read their terms and conditions, I was concerned about their fees and limitations. I thought some of the fees are too high and there are too many potential pitfalls. One particularly limiting feature is the $4.95 processing fee when other people contributes to your account — especially when this was one of the advertised features.
In any case, I do encourage you to read it carefully. Otherwise, it could turn into a fee nightmare, or a fee trap per Free Money Finance.
Conclusion
I think SmartyPig definitely have a good concept going here. There are some usability issues — both the web site and the processes — that could be improved. If you have a few minutes, go ahead and have a look. You could even start an account without adding any fund.
Even if you don’t use SmartyPig, I think the underlying concept is very good and you could implement a similar homemade process to teach your kids about saving up for financial goals.
See what others are saying about SmartyPig:
- SmartyPig: A Simpler Way to Save Or A Fee Trap? at Free Money Finance
- Earn 4.50% at Provident Direct & 4.30% at SmartyPig at Christian Finance Blog
- Win $100 for opening a new savings account with SmartyPig at Wise Bread
- Social Networking Meets Savings Accounts: SmartyPig Launches this Week at NetBanker
- Some Notes on SmartyPig at The Simple Dollar
This article was featured in:
- The Money Hacks Carnival #5 hosted by Antishay Ventenne. For more information please visit the Money Hacks Carnival.
Wanted to let your readers know that within the next few days we will be restructuring our public contribution fees. SmartyPig customers will be able to make contributions to other SmartyPig users’ goals and buy gift cards at NO cost if they use their existing SmartyPig funding source, i.e. their checking or savings account. Our fee to make a contribution using a credit card will be set at a flat 2.9%, and we are also planning on releasing a few other payment options in the future, as well, so that using SmartyPig will be economical for all users. No fee trap. Just simple, smart savings! Thanks!
Jon Gaskell, Co-Founder, SmartyPig
Pinyo, thanks for the overview on Smarty Pig. Looking into it is on my to-do list, though I think it’s probably going to have to wait until after spring break. Thanks for the link, also!
Jon - Thanks for mentioning that you’ll be restructuring the fees. I’ll look for the new fee structure when I check into Smarty Pig next week.