If you have more money than you need at the moment, you can save it – in other words, keep it for another day rather than using it now.
You can save:
- for a particular reason, normally in the fairly near future– to buy an expensive item, to go on holiday
- more generally for the long term (because you will always need money in the future).
At its simplest, you can save just by putting your extra cash somewhere safe and out of sight – in a piggy bank or jar – where you won’t be tempted to spend it. Some people have different jars for different purposes (clothes, going out, presents etc).
But the most effective way to save is by using a savings account in a bank or building society.The main advantage of a savings account is that it will pay you interest; that means that the bank or building society will pay you a certain amount in return for holding your money; this is paid at set times and at a set rate ( which is a percentage of the money in the account). So you will end up with more money than you put in.
Interest is forbidden under sharia law, so sharia-compliant savings accounts are operated differently; you can find out more information here.
You might also be interested in the other pages in our money section: