What Is the PIGGY BANK Act?

In a bid to prepare high school students for managing money responsibly in the future, lawmakers have proposed a bipartisan bill. The bill, which is dubbed the PIGGY BANK act, would provide a cash benefit for high school students to encourage them to save. Find out more about this proposed bill and what it could mean for financial literacy and high school students below.

What Is the PIGGY BANK Act?

As of November 2021, the PIGGY BANK Act is a proposed piece of legislation or bill. Before any of its provisions may be implemented, it has to become a law. Bills become laws by being approved in both houses of Congress—the Senate and the House of Representatives—and being signed into law by the President.

The PIGGY BANK Act was introduced as legislation in the Senate in late September of 2021. That means it has a ways to go before becoming a law, if it becomes a law at all.

Who Sponsored the PIGGY BANK Act?

Any legislation introduced into the Senate or House of Representatives must be sponsored by a federal lawmaker. The Program to Inspire Growth and Guarantee Youth Budgeting Advice and Necessary Knowledge, or PIGGY BANK, Act was introduced by Gary Peters, a Democratic senator from Michigan, and Cynthia Lummis, a Republican senator from Wyoming. The senators are also working with organizations such as the National School Boards Association on the bill.

The fact that senators from both of the major political parties introduced the bill together means it has bipartisan support. That means lawmakers from both political parties may be willing to vote yes on it. While that doesn’t mean the bill will definitely pass, it sometimes does make it more likely. 

What Are the Major Provisions of the PIGGY BANK Act?

The PIGGY BANK Act is being positioned as a financial literacy bill. The concept is that by providing high school students with the means to practice good money management as teenagers, the bill can help create more financially responsible future adults.

Here are some of the major provisions of the bill:

• Creating a pilot program of high school students and giving each $300 in an initial savings deposit. 
• Incentivizing students to save more by providing a $25 match every month—that means for the first $25 a student saves in a month, the program will provide $25 in savings too.
• Requiring participating students to take a financial literacy class.
• Allowing students to withdraw funds a year after graduating high school to pay for expenses such as education, a business start-up, medical needs, or buying a home. 

It’s important to remember that these are the major provisions of the bill as introduced in the Senate. Typically, bills may receive modifications as they go through the process, so it’s possible the House might propose its own version of the bill.

Why Is Financial Literacy So Important?

Perhaps one of the reasons this bill has bipartisan support is that most people can get behind the importance of financial literacy. Financial literacy refers to a person’s ability to understand personal financial matters and develop the skills to manage their own money responsibly.

Financial literacy is important for many reasons:

• Understanding how to budget and manage money well helps people of all ages live within their means and reduces the stress financial duress can cause.
• Knowing how credit works and how it impacts buying ability and other future financial decisions helps young adults plan for the future, safeguard their own financial stability, and better ensure they can buy homes or make other money moves when they’re ready.
• Learning about the benefits of saving and practicing it early in life can set people up for better financial habits that provide advantages all the way to retirement.
• Getting to understand the basics of investments and even participating in building wealth as early as possible can also help kids create financial foundations that serve them well in the future. 
• Engaging in financial activity early can help kids learn about the importance of safeguarding their information and identity in today’s world.

Using the PIGGY BANK Act as a Teaching Moment

If the PIGGY BANK Act passes, parents can use it as a great teaching moment for their high school children. Encourage your child to participate by taking the required financial literacy class with them and providing ways for them to earn money they can save through the program.

Even if the PIGGY BANK Act doesn’t pass, parents can still teach financial responsibility and literacy in their own homes. You might go so far as to make a deal with your child similar to what the PIGGY BANK Act aims to do. Give them a certain amount to start a savings account and match some of their savings efforts through the years.

Here are some other tips for working with your kids on financial literacy:

• Set your kids up with an Acorns account so they can invest money a tiny bit at a time. Acorns is a micro-investing app that lets you invest with literal change.
• Get a debit card for your kids. You can fund it with a certain amount of money a week or month. This helps your kids learn to stretch money over a period of time and budget for what they need and want.
• Teach good money habits by encouraging your child to save for the things they want and make hard choices between spending, as money isn’t unlimited. 
• Include children in an age-appropriate way in the financial decisions of your household.

While the PIGGY BANK Act is certainly an exciting piece of legislation for parents and high school students, you don’t need to wait for Congress to act before you can foster financial literacy. Consider setting up a savings account for your child today to get started.

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