What To Do With Savings in 2026
Wondering what to do with savings? If you’ve got money that you’d like to save for the future, knowing the best place to put it can be difficult, especially with interest rates so low.
Generally, it’s a good idea to have three months’ worth of livings expenses saved up so that you can navigate financial emergencies. This should ideally be in an account that you can access easily. Saving up 10% of your wages each month is good practice, if you can.
What To Do With Savings
It’s been a turbulent year for interest rates but there are now plenty of sensible options for your savings. Here’s my top tips on putting your savings to good use.
What To Do With Your Savings in 2023
Average Savings by Age
It’s no surprise that our attitude toward savings differs depending on our age and financial situation.
Based on the Office of National Statistics data, the average amount people have in savings increases as they get older.
Here’s what the average savings by age looks like in the UK:
| Under 25 | £2,533 |
| 25-34 | £4,775 |
| 35-44 | £6,751 |
| 45-54 | £14,591 |
| Over 55 | £35,607 |
How much should you save each month?
Where possible it’s sensible to save at least 3-6 months worth of living expenses in case of an emergency.
As a general rule, some say that you should aim to have the equivalent of your annual income in savings by age 30. Using the same rule you should aim for 3 times your income by age 40, 6 times your income by 50 and 8 times your income by 60.
Saving V’s Investing
With interest rates so low on savings accounts you may have considered investing your money. But what exactly is the difference between saving and investing?
- Saving money is when you put money aside over time. Most people use a bank or building society to save into; earning a small guaranteed interest on their savings.
- Investing money is when you put your money into something that you believe will increase in value over time such as property, stocks or shares in a business. If it goes well, you could make money, if it doesn’t, you could make a loss.
Over the long term, investing usually outperforms savings. Unfortunately, as investing comes with a risk, profit is never guaranteed. If you can’t afford or don’t want to take any risk with your cash, then saving is for you, and there are plenty of resources online that explain things like what is a cash value life insurance policy and different interest rates on various types of savings accounts, so you should start looking for the best option for you.
Use a savings calculator to workout the growth of your money in a high yield savings account. These calculators are a brilliant way to plan ahead and gain an understanding of what your financial situation might look like in the future.
What is a Lifetime ISA (LISA)
If you’re looking to buy your first home in the near future then you could look at saving your money in a Lifetime ISA.
The Lifetime ISA (LISA) was launched in April 2017. Anyone aged 18 to 39 can open one and save up to £4,000/tax year into it. The government then adds a 25% bonus on top to help you towards owning your first home.
First-time buyers can use their LISA savings towards the deposit for any residential property (costing up to £450,000) once they’ve held the LISA for at least 12 months.
The Help to Save Scheme
The Government’s Help to Save scheme helps people who claim universal credit or working tax credits to save. The scheme pays a 50% bonus on the amount saved, up to a maximum bonus of £1,200 over four years.
Help to Save: Helping Low Income Earners to Save
Different Savings Accounts
There are a few different savings account options available depending on the the level of access you want to your accounts.
- Regular savings accounts require you to put money away each month. They often offer relatively high interest rates (compared to fixed or easy-access savings accounts). However, they tend to impose rigid conditions such as limiting withdrawals or forcing you to make a monthly deposit.
- Fixed-rate savings lock down your money for a specified length of time. They tend to offer a better interest rate then easy-access accounts and usually pay out the interest you’ve earned when they mature.
- Easy-access savings allow you to add to your savings and withdraw your savings whenever you like. You’re usually paid interest monthly but interest rates tend to be lower than regular savers or fixed-rate savings.
- Notice savings accounts are great for people who know they’ll need their money, but don’t know when. You need to give notice to withdraw your cash (usually 30-120 days).
- A cash ISA is a savings account where the interest isn’t taxed. Anyone over the age of 16 in the UK can put up to £20,000 in an ISA each tax year.
The trick to finding the right account for you is to access when you’re likely to need your money out of the account (e.g. are you buying a house?) and then finding the best interest rate for the level of accessibility you need.
Best Easy Access Savings Accounts
- Tembo – 4.55% on up to £20k – easy access saver
- Zopa 4.45% AER – easy access account (+ 7.1% regular saver).
- Plum 3.05% AER – with the Plum 95 Day Notice Pocket.
- Monzo 2.75% AER – easy access account (+ £10 bonus for new users).
Other Smart Ways to Use Your Savings
When we think about savings we automatically think about savings accounts and where we can store our money. But storing your money away might not always be the best approach. Consider these options when thinking about savvy ways you can put your savings to good use.
- Overpay your mortgage. If you have money spare, it could be a good idea to reduce the balance on your mortgage. Doing this could save you hundreds or even thousands of pounds in interest. Some mortgages charge a penalty for you to overpay, so check with your mortgage provider first.
- Open a savings account for your child. Under 16’s can often earn more, and get a personal allowance. Setting up an account in your child’s name is a great way to invest in their future.
- Home improvements. Using your savings to make some improvements at home is a great way to add value to your property.
- Save for specific goals. I have several savings posts that I use to save for holidays, emergencies, Christmas and more.
Do you plan on opening a better savings account after reading this post? I’d love to know what type of account you’re considering and if you’ve found any great deals. Let me know in the comments below.