https://www.youtube.com/watch?v=xr8cAp9ygAQ

Piggy banks may seem best suited to our childhood era.  We mentally organize them with wagon-rides, tooth fairies, and the endless pencil-sharpening of early grade school.  But as adults, we need and use piggy banks; they just come in a different form.  When people need money for life’s setbacks and lean times, one of the most accessed “piggy banks” is the 401(k), says Richard Rubin and Margaret Collins, in the Bloomberg article, Early Tap of 401(k) Replaces Homes as American Piggy Bank.Financial products are designed for a specific job.  They may disintegrate when called upon for side jobs outside their area of expertise.  The 401(k), intended for retirement planning, presents serious concerns when doubling as a piggy bank.  Taxes and penalties add hardship in some of life’s darkest financial times when money is tight.

This article addresses the market and social forces that caused this phenomenon of this shift in asset choice.  It honestly assesses the problems with using the 401(k) as a piggy bank and proposes solutions.

In addition to discussing the points of this article, we’ll separate fact from opinion.  We'll help you think through the savings and protection component of your personal economy.  Then, you’ll be able to progress toward time and money freedom, while best handling financial challenges along the way.

Table of contentsWhy You Need a Piggy BankWhere a Piggy Bank Fits into Your Cashflow Creation SystemThe Problems with Using a 401(k) as a Piggy BankThe Money is Not All YoursA Penalty to Use Your MoneyPenalties in the BillionsRequired Repayments Limit FlexibilityA Retirement CrisisThe Systemic Financial Crisis in a Different Light#1: Compartmentalized Money#2: Lack of Accessibility#3: Lack of GuaranteesAverage vs. Actual ReturnsThe Shift from Using Home Equity as a Piggy BankSuggestions to Fix the ProblemThe One Question We Should Ask Instead to Gain ControlA Better Alternative to Store Cash

Why You Need a Piggy Bank

Just because you’ve outgrown the childhood scrapes, bruises, and dirt under the fingernails doesn’t mean you’ve outgrown the need for a piggy bank.  One of the most predictable financial needs is to have accessible cash that you can save for emergencies and opportunities.When you need to replace tires, have medical bills to pay, a child’s wedding or college, or want to buy a rental property, where will you get the cash?

Having access to cash is such a consistent and guaranteed need.  By planning ahead and storing cash that will be there when you need it, you’ll bolster your peace of mind.

But without available cash, you’ve got to use tools that aren’t ideal, like home equity, retirement savings, or a credit card.

Where a Piggy Bank Fits into Your Cashflow Creation System

Building a stockpile of savings is to help you weather months of tight income or unforeseen expenses will move you light years ahead towards peace of mind and financial stability.  But it’s just one small step of a greater journey of building time and money freedom.  

That’s why we’ve put together the 3-step Entrepreneur’s Cash Flow System.  

The first step is keeping more of the money you make.  This includes tax planning, debt restructuring, cash flow awareness, and restructuring your savings so you can access it as an emergency/opportunity fund.  This step frees up and increases your cash flow, so you have more to save, and consequently, more to invest.

Then, you’ll protect your money with savings, insurance and legal protection.  Here, you’ll create the right canopy of protection in your financial life.  This second stage encompasses all aspects of Privatized Banking, a key savings and capital deployment strategy that secures your access to capital, maximizing your control, by allowing you to be your own banker.

Finally, you’ll put your money to work and get it to make more by investing in cash-flowing assets to build time and mone...