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. Savings accounts differ in type, including:

  • ISAs (Individual Savings Accounts): 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: Allow easy withdrawals.
  • Regular Saver Accounts: 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.