Free lesson · Lesson 11 in the app
What is Saving?
What saving is, what it's for, and the habit of paying yourself first.
About 8 minutes · 10-question quiz · Ages 10 and up
Learn
If you found £20 on the street right now, what would you do with it?
You might spend it straight away, or put it aside for something bigger. There's no wrong answer, but your choice says a lot about how you think about money.
In Lesson 7 you learned the order that works: needs first, savings second, wants third. This lesson zooms in on that middle step.
Saving sounds easy enough, since all you have to do is not spend everything. There's a bit more to doing it well, though, and it's one of the most useful money skills you'll ever learn.
What saving means
Saving means spending less than you get and putting the difference aside, on purpose. There are no formulas or clever tricks to it.
What makes it worth doing is who it's for. When you save, you're choosing to look after your future self as well as the person you are today.
When you save £10 instead of spending it, you're saying: "Future me will get more out of this than one more snack today."
It's a bit like sending a gift forward in time to yourself.
Why people save
Most savings have one of four jobs:
- •Emergencies: an emergency fund is money kept for surprises, like a cracked phone screen. It's your safety net.
- •Goals: something you can't afford yet, like a bike, a trip or a gaming set-up.
- •Future freedom: more choices later in life.
- •Peace of mind: the calm of knowing there's money there if you need it.
The job decides where the money lives. Emergency money has to be easy to reach. Money you won't need for years can go somewhere with more chance to grow. Lesson 12 looks at where to keep it.
Pay yourself first
Most people save whatever is left after spending, and there's usually nothing left.
Smart savers do it the other way round. They pay themselves first, the habit you met in Lesson 7:
1. Money arrives (pocket money, birthday money, cash for a job).
2. Straight away, move your saving amount somewhere separate.
3. Only then think about spending.
Even 10% makes a real difference over time. If you get £20 pocket money, £2 goes into savings before you spend a penny. You'll hardly miss it, and it adds up week after week.
Saving or hoarding?
There's a difference between saving well and hoarding.
Saving has a purpose. You know roughly what the money is for, and you still enjoy some of it now.
Hoarding is keeping money out of worry, with no plan. People who hoard can feel anxious about money even when they have plenty.
Never spending anything would be a miserable way to live. Good saving means spending on purpose, on things that matter to you, while your savings build in the background. You're looking for a balance between enjoying money now and looking after it for later.
Starting your saving habit
Lesson 6 showed you don't need lots of money to start. A simple system helps, though:
Step 1: Decide how much to save. If you're not sure, 10% is a good start.
Step 2: Give savings their own place, even a jar at first.
Step 3: Move the money as soon as any arrives.
Step 4: Only use it for the job you gave it.
Saving regularly works better than saving big amounts now and then. £2 every week adds up to £104 in a year. A friend plans to save £20 whenever they remember, and remembers three times. They end up with £60 and no habit.
Once saving is automatic, it stops feeling like effort.
Practice
No marks here. Have a think, or talk it through, then open a model answer.
The pay-yourself-first challenge
You get £30 for helping a neighbour with their garden. You've decided to pay yourself first and save 20%.
Question: How much do you save straight away, and how much is left? Why save it before you think about what to buy?
People save for different reasons. What does having savings give you?
Saving or hoarding?
Your friend has saved every penny for two years. They have £500 but no idea what it's for, and won't spend any of it, not even on things they really need. They say they're just being responsible.
Question: Is this smart saving or hoarding? What would you want them to understand?
Try the quiz
Pick an answer to see if it's right, and why.
Question 1 of 10
What is saving?
Question 2 of 10
What is the "pay yourself first" rule?
Question 3 of 10
True or False: The best way to save is to put aside whatever is left over after spending.
Question 4 of 10
What is an emergency fund?
Question 5 of 10
If you're not sure how much to save, what share of your money is a good place to start?
Question 6 of 10
True or False: Smart saving and hoarding money are the same thing.
Question 7 of 10
Why does saving regularly matter more than saving big amounts now and then?
Question 8 of 10
When you save money, you're:
Question 9 of 10
What's the first step in building a saving habit?
Question 10 of 10
What's the goal of smart saving?
10 questions. Nothing is saved, so have a go.
Where a lesson mentions another lesson by number, the free ones are linked. The rest are in the app.
Keep going in the app
In Squids-In, children work through 160 short lessons like this one, in order, alongside a friendly investing game. You can see how they're getting on. It's free while we test it with a small group of families.