You probably have a pretty good idea what a savings account is, a more sophisticated version of the biscuit tin under the bed or a savings jar on the mantelpiece.  It’s a place to save your spare cash away from your day-to-day bank account.

Most people save in a bank or building society account where they can get to it quickly, the money is safe and you’ll currently get around 3 to 4% interest a year (before tax).  Most savings accounts allow you to start with a pound and it’s a great habit to get into.

Pros

• It’s easy, a number of companies offer them, online, at your bank or building society – you can even buy them at your local supermarket.
• Your money’s safe and you’ll get back at least what you put in.
• You can usually get access to your money easily – but be aware of any notice periods.
• It’s generally up to you what you save and when.
• Your money’s earning interest while it’s sitting there.
• It’s easy to compare interest rates and hunt down the best deal.
• Non-tax payers can register to have their interest paid without deduction of tax (gross).

Cons

• Interest rates are less volatile than the stock market but they can fluctuate.
• If you’re a tax payer, the tax man will take a slice.

Saving is for everyone - whether you’re saving for something special, like a wedding or a holiday or just to give you something to fall back on when things go wrong.

As a general guide it’s good to have at least three months' salary stashed away in a savings account for emergencies.

It’s about choosing a company you trust, a method that works for you – you can open an account at your local bank or building society branch, online or by post.

It is unlikely to take very long, you can do it yourself and all you’ll need is some form of identification and the amount of the minimum initial deposit in order to open an account.

Expect the unexpected - try and have a minimum of three month’s salary stashed away in a savings account for emergencies.

Don’t get too comfortable - rates change all the time, so if there’s a better rate elsewhere, give any required notice and move your money.

If you’ve got more, get more – if you’ve got a few thousand or you can leave it in for longer you can generally get more interest.

Surf for your savings - internet accounts often give higher interest rates than high street banks so if you’re comfortable investing over the internet – this could be ideal for you.
 
Look for a bigger net – interest rates are usually quoted ‘gross’ which is before tax, so if you’re a tax payer always check out the ‘net’ or after tax rate.

Look out for tax-free savings first – Cash ISAs are simply a tax free savings account. You could be better off if you make these your first option. Please be aware that tax rules may change.

Compare interest rates with inflation – if your interest rate is lower than the rate of inflation the buying power of your money will be going down.