Start small. Don't give up. Don't dip into your savings unless it's an emergency. Did you know that if you saved £1 per day and invested it at 3%, you could have almost £27,500 in 40 years? This incredible figure is due to 'compound interest' (which is interest on interest over a long period). The earlier you start saving, the more time you leave for compound interest to take effect.

The final sum over a long period is considerably affected by the interest rate applied to your savings. Even if your savings are initially in a high interest account, check every now and again to see if you can get a better interest rate elsewhere. To find out more about interest rates, have a look at our section on interest.

I'd rather keep it under the mattress than trust anyone else
You might not trust anyone else with your money and choose to hide it away somewhere in the house. The risk here is that you could forget where you put it or someone else might find it. You could lose every penny, so let's take a look at some more secure alternatives.

Savings and banking
If you've got money to save you have various options.

If you want your money to be as safe as possible, then you should consider putting it into a bank or a building society. Look for the one with the best interest rate i.e. the one where your money will grow the most.

You'll have a choice of two main types of accounts, 'notice accounts' and 'no notice accounts':

No-notice accounts are where you can withdraw your money immediately, without having to wait for a notice period.

Notice accounts usually pay better rates of interest. You'll have to serve out a pre-agreed notice period before you withdraw your cash, typically 30, 60 or 90 days. (Some notice accounts will let you withdraw your money immediately if you pay a penalty.)

Pardner scheme
A group of people regularly deposit sums of money over a fixed interval with a principal individual, the 'banker', in a central fund. Each person in the group takes a turn in withdrawing their 'hand', usually the total amount collected for that week or month. It tends to operate amongst friends, families or close groups of other kinds. It is more frequently used for saving for smaller purchases, usually in conjunction with other more formal borrowing or savings schemes.

Credit unions
Another alternative to saving and borrowing with a bank or building society is to use a credit union.

Save as you earn
A way of saving money, via payroll deduction, which helps you put money aside before you get hold of it. You authorise you employer to take an amount of money from your wage/salary. They hold this in an account for you. If you don't get it you can't spend it. The current minimum deduction is just £5 a week and the maximum is £250 per week (there may be restrictions with regard to the term you are required to save for, so seek further advice if this appeals to you).