Money saving tips with Jack


Saving money with Jack

Saving your money makes it easier to pay for the bigger things that you want, like a holiday or maybe a car.  Jack is a care experienced young person who has learnt how to save his money.  He’s got three pieces of advice for saving money:

“Money tins are one of the best ways to save money.”

1. Money tins

If you have a money tin you can start saving and put aside as much or as little as you like.  You can put any amount of money in it from 2p coins up to notes.  Just put your change in there and over time it will build up.  You can get a money tin from Poundland, or use an empty jar.  This is great for saving smaller amounts or saving up for fun stuff like trips to the cinema.    

2. Bank savings account or ISA

If you want to save larger amounts then you can set up a separate savings account with your bank, or a savings ISA.  You don’t pay tax on the interest that you earn from your ISA.  For some of them you will have to sign a contract to say how much you want to save or how long you want to be saving up for, and if you want to take any money out before you’ve saved that much then you have to pay to withdraw it.  That makes sure that you save the money and don’t take it out early unless you really need to.

“If it was me, why would I pay to withdraw my own money when I want to save it?”

You can set these accounts up at your local branch or use online banking, and you can check how much money you’ve saved online or at a cashpoint.

What is a savings account?

Your bank account is probably a current account.  You use it all the time with money going in and out from your wages and/or benefits, and it has a debit card so that you can spend your money easily.  A savings account is different because you don’t get a debit card for it so you can’t spend your money so easily.  To spend it, you have to move it back into your current account.  Because of that, the bank will pay more interest on the money that you’re saving in it.  There are different types of savings account:

Regular savings that you pay a bit into regularly, like every week.  

Fixed rate means you lock your money away for a period of time, maybe a year, but get a good rate of interest that’s fixed and won’t go down or up.

Easy access means you can pay in or pull your money out at any time, but the interest rate changes so you need to keep an eye on it as you might be able to get a better interest rate with another type of account.

What is an ISA?

ISA stands for “individual savings account” and it’s a savings account where the interest that you earn isn’t taxed.  There are different types, like fixed-rate cash ISA or an easy-cash access ISA.  Anyone over the age of 16 in the UK can put up to £20,000 in an ISA each tax year (April 6 – April 5) and once in, it stays tax-free year after year.

3. Save through work

Jack works for an agency and has the option to save direct from his wages.  If he gets paid £9 an hour into his bank account then he’s actually being paid £10 an hour and the extra £1 goes into a separate account for his holiday savings.  It’s usually called Save As You Earn (SAYE) or Payroll saving, and there are different ways to do it.  If you work through an agency or get paid by PAYE then you should be able to arrange it with your employer and the money will go into a savings account, often with a credit union, so you save it before you get a chance to spend it.  You can choose how much you save and how regularly.