Topic Summary
People save money to afford things in the future, such as a car, a house, or even a new pair of running shoes. Others create an emergency fund to cover unexpected expenses for 3+ months.
Why Save in a Savings Account?
Money is kept safe and earns interest; this interest is the reward for saving. There are different types of savings accounts, including:
- ISAs (Individual Savings Accounts): These offer tax-free interest on savings up to £20,000.
- Fixed Rate Accounts: Lock away money for a set period in return for a higher interest rate.
- Easy Access Accounts: Withdraw your money easily.
- Regular Saver Accounts: These require a fixed amount to be saved each month.
- Green Savings Accounts: Fund environmentally friendly projects.
Pensions are also a way of saving for retirement, often with tax benefits.
Compound Interest: Interest calculated on the initial principal and the accumulated interest, making it a powerful tool for growing savings.
Question
Which of these is not a feature of a savings account?
Discussion
Ask a selection of friends and/or family: how they have approached saving? What are some of the challenges people might face when trying to save?
How it works in real life
Search online to find more about different types of savings accounts available for a 16 year old; try using www.MoneySavingExpert.com. Which one has the most attractive features? What are some of the downsides of these accounts?