Saving and keeping money safe

Saving means putting money aside for later. Banks can pay you interest for saving, and help keep your money safe.

Practise this lesson free (6 questions)

Why save?

People save for goals, such as a bike, a holiday or university, and for emergencies, such as a broken phone.
Saving a little regularly adds up. Saving £5 a week gives £260 in a year (52 weeks).
Saving also helps you avoid borrowing, which costs money.

Where to save

You can save in a money box, but money at home can be lost or stolen and does not grow.
Banks, building societies and credit unions offer savings accounts. They pay interest: a reward for keeping your money with them, shown as a percentage per year.
The Financial Services Compensation Scheme (FSCS) protects savings in UK-authorised banks and building societies up to a limit per person per bank (£120,000 since December 2025) if the bank fails.

Working out interest

If you save £200 at 3% interest per year, you earn 3% of £200 in a year.
3% of 200 = 200 × 3 ÷ 100 = £6.
After one year you have £206.
If you leave the interest in, next year you earn interest on the interest too. This is called compound interest.
Worked example

Priya saves £150 in an account paying 2% interest a year. How much interest does she earn in one year?

  1. 2% means 2 out of every 100.
  2. 150 × 2 ÷ 100 = 3.
  3. So she earns £3 interest and has £153 after a year.

Answer: £3 interest.

Key idea

Save for goals and emergencies. Banks, building societies and credit unions pay interest on savings. The FSCS protects savings in UK-authorised banks up to a limit if a bank fails. Compound interest means earning interest on interest.

Key words
Interest
Money paid for the use of money: savers earn it, borrowers pay it. Shown as a percentage per year.
Credit
Borrowing money and paying it back later, usually with interest.
Compound interest
Interest earned on your savings and also on the interest already added, so savings grow faster over time.
Compensation
Money paid to make up for a loss or injury.

All KS3 Citizenship key terms and definitions →

Quick check

Try two quick questions

See if it has sunk in. Answers are marked straight away.

Extra practice

2 more questions

Try each one, then tap to check.

  1. Leah saves £6 a week for a year (52 weeks). How much does she save?

    Show the answer

    Answer: 312

    £6 × 52 = £312.

  2. You save £500 at 3% interest per year. How much interest do you earn in one year?

    Show the answer

    Answer: 15

    3% of £500 = 0.03 × 500 = £15.

Check you have got it

Answer 6 quick questions with instant marking. If you get one wrong, GCSE-ready shows you why and gives you another go. It is free, and you do not need an account.

Practise this lesson free (6 questions)All KS3 Citizenship lessons

Video for this lesson coming soon. Subscribe on YouTube

Sources and references

Checked by the GCSE-ready editorial team, 16 October 2026. Last updated 2 October 2026. Spotted a mistake? Tell us and we will fix it.

Related lessons