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Financial Literacy Lesson two: Savings Accounts for Students

Did you know in 2019, 69% of young people say the bulk of their financial understanding comes from their parents and only 8% said it comes from school? That is an alarming difference.

It’s not necessarily a problem. However, given the social economy our society operates in, there is an argument that if we could provide consistent and equitable access to financial education for all students and parents, communities will reap the benefits overall.

Parenting is tough as it not only comes with taking care of children, but the financial responsibilities of running a household and earning a living are very different lived experiences from adult to adult. Furthermore, if a parent hasn’t had the best access to financial literacy themselves, it doesn’t always bode well for the child. It is extremely important for financial literacy to be centralised in schools so all students have an equal chance of understanding the world of money.

School Should Be is committed to helping young people access the information they want to be learning at school. It is also a platform for teachers to access resources and articles that will be useful for their students. We asked Jay, a chartered accountant with 5 years’ experience working in a Big 4 Accounting firm to break down some of the lessons in financial literacy students should be learning at school. In this article, Jay explains what young people need to know about savings accounts.


In short, yes.

Whilst you may not have a part-time job to earn any money you shouldn’t forget about any of the pocket money or cash gifts you receive. As you reach ‘adulthood’, the recommendation is you have a few months’ cashflow saved up depending on your circumstances.

A savings account is more restricted than a current account – you won’t receive a debit card and will likely have to move money from your savings account to your current account before you can spend it.

Savings accounts usually offer higher interest rates than current accounts, and there’s three main types:

  • Easy Access Savings Accounts

  • Regular Savings Accounts

  • Fixed Savings Accounts


With an easy-access savings account, as the name suggests you can access your money at anytime. The interest rate is usually variable and can change at short-notice.

This type of account is ideal for a first savings account.


Saving regularly is rewarded by the banks, with interest rates offered exceeding those for easy access ones fixed for a certain time period. You’ll only make the most of this account however if you’re able to save an amount each month, and some accounts to have limitations on the number of withdrawals you can make each year.

This type of account is perfect to get into a regular savings habit, but is most beneficial if you do have a regular income (e.g part time job or pocket money). It can also be helpful to encourage you to save towards a fixed goal!


A fixed savings account is ideal for when you don’t need access to your funds for a set period of time (usually at least one year). The interest rate offered by the bank is fixed and you’ll pay in a single lump sum of money when you open the bank account, and can withdraw the funds at the end of the term, alongside the interest earned.

This type of account is great to earn the best interest on cash that you don’t need access to right now. It’ll prevent you spending and using the cash you’ve earned – particularly if you know you’ll need this money in the future (e.g to buy your first car, or for when you go to university).


Saving money should become a habit – and when starting as a student it’s important not to get caught up in the actual amount. Saving money doesn’t have to be a chore – there’s plenty of resources available to help you save, whether it be to create your rainy day fund, or for a specific purchase you have in mind.


If you’re receiving income from a part-time job or pocket money, I’d recommend using the regular saving method. Transfer a proportion of your income every month on payday into a savings account via a standing order. If you don’t see the cash in your current account, you’ll think twice before using it.

How much do you save? As much as possible is how my mum would answer this question. Whilst somewhat true, there’s no ‘right’ amount to save. It all depends on your financial goals. It’s more important to be consistent and realistic with the amount you save each month. 20% of what you ‘earn’ (whether that be pocket money or a salary!) is a good starting point.


An alternative to regularly saving is to transfer any money left over in your current account at the end of the month into your savings account. This might be an inconsistent amount, depending on how much you’ve spent in the month, but will still start to build up your savings.


If you struggle to save, an alternative may be to use an app linked to your bank account which rounds up the cost of your everyday transactions and saves the difference. For example, spending £2.80 on a cup of coffee will be rounded up to £3.00 and you’ll put 20p into your savings account. It may not sound like much, but it will add up over-time and you’ll get into a savings habit without even realising.

There are lots of recommendations about savings: some say save 20%, some say 15%. We think you should save a consistent amount every month, whether that is £5, £10 or £100 to form a habit with it.

Putting money aside is a habit that needs to be formed, so the more consistent you are, the more it will become ingrained and part of your money management routine.

It is helpful to manage your money with a current and savings account as early as you can to understand how money works. Trust us when we say it can be a liberating feeling as you get ready for the adult world!

Jay is a chartered accountant who took an unconventional route into his career – it didn’t start with university. Feel free to contact Jay for more info! The above is not intended to provide advice and is the personal view of the author.


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