Building a healthy savings pot (or ‘rainy day fund’, as many people call it) gives us greater financial security because it allows us to create a financial safety net. So when the freezer packs in, the car needs an unexpected repair, or you need to find some extra cash fast, you’ll have funds to dip into. It also opens up possibilities for the future, so we can afford more of the fun things in life.

When it comes to saving, it’s important to think about your goals for your money. What do you want it to do for you, and when? Saving (as opposed to investing) might typically be used towards short-term goals, like a holiday, or some new clothes. For bigger goals, like retirement, you’ll need to consider taking more risk by investing in something that has the potential to give you a greater return.

The most obvious options are banks and building societies, and you can check online comparison sites for the best interest rates on offer. But with interest rates so low, you might choose to look at other savings options, like premium bonds. They give you a chance to win a tax-free cash prize each month to add to your savings. The odds of winning are quite slim, although the more you invest up to the maximum £50,000, the greater your chances are. 

Saving is easier if you set up a standing order. You’ll be less likely to notice the money going out of your account so you won’t be tempted to spend it.

Whoever you put your savings with, make sure it’s covered by the Financial Services Compensation Scheme (FSCS). This scheme compensates you if your bank or building society runs into financial difficulty, up to a limit of £85,000.