Savings

Not only will a personal need money to put towards their retirement in the form of a pension, but they will also need to put aside money in case there are any unexpected bills or large purchases in the future that require funding. This is where savings come up, and describes money put aside for this very purpose once a person's expenditure has been subtracted from their incomings, which should hopefully leave a surplus!

The term savings can be applied to any assets a person has, but is most commonly used to describe cash which is in a specific savings bank account ...or stashed under their mattress at home. Although there may be some question marks over the robustness of the current banking industry, it is still probably safer than hiding it under the mattress where it would be quite easy for someone to steal and without any compensation or insurance should that happen. Whilst money in a current account could be classed as savings, money specifically intended to be saved by the person is usually in a separate savings account which pays a higher rate of interest. The characteristics of these accounts vary tremendously between account providers in terms of interest rates and access to your money should you need it, so it is important to do your research and find the right account for your needs.

Savings are also put into tax-free accounts such as cash ISAs where there is no tax to pay on the interest, although the amount that can be put in each year is limited.