Personal finance - WJECSavings

Savings can be described as a pot of money which you set aside. You might decide that you will save a certain percentage of your income every month.

Saving accounts

Sometimes people use a special type of bank account called a savings account. The bank will pay money into the savings account. This is called interest and the amount paid in by the bank depends on the interest rate, which is given as a percentage of the amount of money in the savings account. The bank will pay in more money if the interest rate is high – and will pay in less money if the interest rate is lower.

Example

Jess is saving to buy a new computer for her final year in college. She needs a total of £890. There is already £250 in her account. She has an allowance of £320 per month from her family. 20% of her allowance goes directly into her savings account. How many months will it take Jess to save the amount of money she needs?

You need to find out how much more money Jess need to save for the computer:

£890 – £250 = £640

To find out how much money Jess will save per month (20% of 320) first find 10%:

10% of £320 = £32

Then double this for 20%:

20% of £320 = £32 × 2 = £64

If she saves £64 per month divide the amount she needs to save by £64 to see how many months it will take:

£640 ÷ £64 = 10

This means she will need to save for 10 months.