Look after the pennies…

Jamie Jenkins

Sleep deprivation continues to be the all-pervasive theme in our house. Our five-month-old son, Arlo, normally surfaces between 6 and 7am, bright as a button. That would be perfect if he’d been sleeping since the night before, but instead that’s often only since 4 or 5am. And that was only from 2 or 3am. You get the picture.

People keep saying to me, “don’t worry, it feels like it will never end, but it will.” I simply think ‘when?!’

But he’s delightful, especially in the mornings. In fact most of the day is spent smiling and giggling, from what I can see. He charms everyone.

We’ve started weaning him onto real food. Over the last few weeks he’s had a different fruit or vegetable every day. Invariably, his first mouthful evokes a face that suggests we’ve just fed him an under-ripe lemon. He winces with what looks like disgust, then shakes his head as if trying to rid the flavour from his mouth. Then he presents an open mouth to the approaching spoon and all is well again. His standout favourites so far are bananas and strawberries. Unsurprisingly, perhaps, when the alternatives are things like pureed peas…

I’m really hopeful a full stomach of food equals a longer sleep at night. One step at a time.

I’ve also come to realise that people weren’t joking when they said that you can never have too many bibs. He goes through about a million a day. The reason is a glimmer of enamel from his first tooth, and the seemingly constant dribbling from the resultant teething. He doesn’t appear to be in pain, but chews on everything in sight, resorting to his own hands if there’s nothing else in reach.

It’s a shame evolution hasn’t found a way of dealing with teething.

The combination of his desire to chew everything and his growing interest in food means Arlo will put virtually anything he picks up in his mouth. The other day, he’d found a coin that had fallen out of my suit pocket. Fortunately, I spotted it before he had the opportunity to demonstrate to his parents the risk of choking hazards.

It did make me think, though, just how much spare change is there lying about people’s houses. So I looked it up…

Some estimates suggest the average household has around £50 down the back of the sofa, in pockets or safely tucked away in penny jars. I think we have more than that.

Habitually, I put all my pennies and other loose change in a jar and occasionally empty it into a machine at the supermarket and exchange it for notes. I then transfer the equivalent amount into a bank account which has now become a savings account for Arlo. There’s a few hundred pounds in there now.

Now, for someone who professes to know a bit about personal finance, this isn’t very clever. The notion of saving is of course a good thing, but the way I’m going about it is highly ineffective. Not only am I losing a chunk of my coinage value through the charges at the supermarket machines, I’m earning little or no interest on the bank account.

In short, the longer this investment strategy goes on, the more its value is being eaten into through the combination of charges and inflation. So I had a look at how I can make a better job of things.

Firstly, there are coinage rules that mean most high street banks will accept the exchange – or at least deposit – of small change without any charge (certainly not the 10% or so charged by some supermarket machines).

As a word of caution, it’s worth asking at a branch of your own bank what they will accept before you turn up with a wheelbarrow full of coins. They will likely have some guidelines beyond any statutory duty to accept minimum amounts. It will also help your cause a lot if you have carefully sorted the coins into their respective denominations as they are usually weighed rather than counted.

If you have slightly older children (not too young to simply try and eat the coins and not so old that they won’t be bribed by their parents), then offer them the 10% charge for sorting them. Or 1% if you think they need a lesson in the realities of business management!

The second aspect of my inefficiency is saving money into a bank account that attracts zero interest. There are plenty of interest-earning bank accounts on offer, but you may struggle to find anything meaningful for the kind of sums you are talking about depositing. Certainly very few that would beat inflation.

Micro-savings could be a smarter way to save

This is where ‘micro-savings’ come in. There are a growing number of banks offering accounts or Cash ISAs where you can deposit small amounts as and when required. Some of them even offer the ability to automatically round-up card transactions (say to the nearest pound, or the nearest next pound). If you are someone who is already cash-averse and use cards routinely for even the smallest transactions, this could work well.

But it goes further.

There is a lot of innovation in micro-savings, and there are already online-only Stocks & Shares ISAs that operate on this basis. You can use the round-up facility for card payments, make ad hoc contributions and even underpin all that with regular monthly contributions.

But it goes further still.

I hear this has now been extended to Junior ISAs (see my previous blog for some thoughts there).

So, I need to seriously rethink counting coins and taking them to the supermarket, paying around 10% in charges, collecting notes and then transferring the equivalent amounts into a zero interest bank account.

If I can avoid all that work, all those charges and invest it all in a tax-efficient stocks and shares account with exactly the same flexibility, that’s got to be worth a look.

I may even consider adding my lottery winnings, if I ever have any.


Jamie Jenkins writes a monthly MoneyPlus column and the views expressed here are those of the author, not Standard Life.

Tax and legislation may change, and your own circumstances will have an impact on tax. A pension, as with any investment, can go down or up in value and may be worth less than what was paid in.

This article shouldn’t be taken as financial advice and is based on our understanding in June 2018.