Hello, my name's Miss Okone.

I'm a teacher from London and I'm going to be taking you through today's lesson.

Let's get started.

Today's lesson is called "Where Can We Save Money?" It is part of the wider unit, "How Can We Manage Money Well?" By the end of today's lesson you'll be able to explain the different ways to save and how people invest money.

The keywords we're gonna hear in today's lesson are interest.

This is the money paid by a borrower to a lender for using their money.

It's usually expressed as a percentage of the amount borrowed or saved.

Invest.

This is putting money into something.

like stocks, property, or a business with the aim of making a profit.

Investment is the money used to buy assets like shares or property hoping that they're going to increase in value.

And lastly, risk.

This is the chance of losing money or not getting the expected return.

Keep an eye out for these keywords in today's lesson.

We're going to start by thinking about what are the different ways to save? The concept of saving has always existed.

This means that we've had the idea of keeping things for the future.

It doesn't always have to relate to money.

For example as a farmer, you might grow crops over the summer, but store or save some of them to keep you fed throughout the winter.

So we're putting something aside for the future.

By saving we're looking after our money, managing it well, and preparing for events that are both expected and unexpected in the future.

We don't just save money by putting it away for the future.

We can also save money by being critical consumers.

This means that we are careful about our purchases and don't buy things on impulse.

To be critical of something is to think about it from lots of different angles.

For example, we might question whether we really need to have the latest smartphone if we already have a phone that works.

Just because you like something or want it doesn't mean that you have to buy it all straight away.

Being a critical consumer means thinking beyond needs, wants, and affordability and thinking critically before you buy.

You might want to know whether the item has been made or packaged, and if the producer offers safe working conditions and suitable pay for their staff.

You might be tempted to buy something cheaper from a large company, but it could be more ethical to pay a little bit more for a higher quality item from a smaller business.

This also might benefit us in the future because it could save us money in the long run.

You won't have to replace it as frequently as if you buy something cheaper that might break.

Laura is saying, "I don't mind saving up and paying more for clothes if I know that they've been produced in places that have safe working conditions and treat their staff well.

I also look to buy secondhand where I can." This is a really good example of being a critical consumer.

Andeep has given us another example.

"I want to support local small businesses because if we don't buy from small shops, they'll struggle to survive." June is giving us a different perspective.

"I don't really buy anything as my mum buys my food and clothes.

When I'm older i like to think that I'll be a critical consumer." Let's check what we've done so far.

If someone's careful about their purchases and doesn't buy things on impulse, they are called what? A, a cautious customer.

B, a careful client.

Or C, a critical consumer.

Pause your video and choose your answer now.

The correct answer is C, critical consumer.

There are lots of different ways to save money.

You can do this at home by using a money box to save cash or by setting up a jam jar system to divide your money each month.

This will help you budget more effectively.

So put some money towards some things and some money towards other things.

Aisha's telling us she saves money in a money box in her house.

"I empty it every year and end up being able to buy something I've wanted all year with it.

Sometimes what I want to buy changes as the year goes on, but this helps me to be a critical consumer." Banks and building societies are another way that we can save money.

They offer various different types of savings accounts such as accounts with higher or lower interest rates, accounts that focus on ethical investments, online-only saving accounts, and app-only saving accounts.

An instant access account is a savings account that has a lower interest rate and that means that you can access your money at any time.

Most banks and many lots of other places will offer these types of savings accounts.

For example, Charlie wants to save money every month because he's saving up for a new oven.

As soon as he has enough money for that oven he wants to be able to access it and take it out straight away.

That means that an instant access account is going to be more useful for Charlie in this circumstance based on what he's saving for and when he'll save up for it.

Notice accounts are a different type of account that often have a higher interest rate.

You inform the bank within a specific amount of time if you would like to withdraw money.

For example, Sarah's saving for a deposit for a house It's going to take her a few years to do this, so therefore she knows that she'll have time to give plenty of notice when she needs the money.

A notice account is a good idea for Sarah because it will give her a higher interest rate than the instant access account, especially because she doesn't need that money straight away.

A cash individual savings account, an ISA, is a special account in which you can save up to 20,000 pounds each year without paying any tax on the interest that you earn.

If you save money in other accounts, you might have to pay tax on interest over 1,000 pounds.

However, some savings account outside of ISAs may offer higher interest rates.

For example, Warren has a lot of money in his savings account because he's saving for sons to go to university.

That means that he pays tax on his savings.

Every year he tries to minimise that tax bill by putting up to 20,000 pounds into his cash ISA.

This means that he can save in that account without paying tax.

This is a really sensible way for Warren to save 'cause he can get a good rate while saving some money without having to pay tax on his savings.

Lukas is saying, "I'd prefer an instant access savings account just in case I had an emergency and need the money quickly." Sam says, "I think I'd want a higher interest rate for my savings, so I'd put some in a notice account, but I definitely leave some in an instant access account just in case." These are both really good ideas to think about spreading out your money.

Let's check what we've done so far.

True or false, cash ISAs are tax-free, and in 2025 you can save up to 20,000 pounds a year in them.

Pause your video and choose your answer now.

The correct answer is true.

Let's put this into practise.

I'd like you to match the ways to save with their descriptions.

Pause the video and have a go now.

I asked you to match up the way of saving with the correct description.

You should have matched them up in the following ways.

A money box is a vessel in which cash can be stored at home.

A jam jar account is a way to divide your money into different parts to help you budget.

Instant access is an account where money can be withdrawn at any time, but the interest is low.

A notice account is an account where money can only be withdrawn when you tell the bank in advance.

A cash ISA is type of account where the government allows us to save money every year that is tax free.

Well done if you got those correct.

Next let's think about an example.

Faye wants to buy a car in two years time.

She's going to save 50 pounds a month and wants to make as much interest as possible.

Which savings account should she use? Write out your answer and explain your reasons.

Pause your video and have a go at this now.

I asked you to explain which savings account Faye should use.

Your answer might have included some of the following.

Faye consider putting her savings into a notice savings account rather than an instant access account.

Since she doesn't need the money immediately she can choose an account that offers a higher interest rate in exchange for limited access.

This is likely to be a better interest rate than an instant access account too.

A cash ISA would allow her to earn interest tax free, but because she's saving a low amount, she'll not pay tax on her savings anyway and therefore the notice savings account is the best idea.

By avoiding an instant account Faye ensures her money grows as much as possible before she buys her car.

Well done if you included some of that in your answer.

Next we're going to think about how people invest money.

An investment is where you put money into something with the hope that is going to gain value over time.

Investments and savings are different.

Savings are setting money aside for events that might happen in the future, whereas with an investment you spend your money on something in the hope that you are going to make money from that thing.

However in both instances the aim is to save and make money for future events.

Investment isn't just about making money and building wealth.

It is part of being financially responsible and it can help us reach financial goals and prepare for the future.

Investing isn't just for adults.

Understanding it now can help you make smart financial choices later.

Interest works on borrowing as it does on saving.

If you borrow money and the borrower charges interest, you pay them a fee.

If you deposit money into a savings account or an interest-based investment, then you'll be paid interest on the amount saved or invested, so it can go both ways.

This diagram can help us to understand the concept of interest.

If something has a high interest rate, for example the savings account that we thought about earlier, it means that the savings could increase quickly.

However, it could also mean that debts increase quickly.

A low interest account works in the opposite way.

Your savings would increase slowly.

However that also means that any debts would increase slowly.

The Monetary Policy Committee, the MPC, sets the Bank of England's base interest rate.

This helps us to control inflation, which is rising prices, and keep things steady.

This helps to maintain a stable economy so we know what the price of things are gonna be over the next few months.

The base rate affects, but doesn't fully control, the interest rates that banks might offer.

When the base rate is low, borrowing becomes cheaper and saving is less rewarding.

That means that you make less interest.

That encourages spending and investment to boost the economy.

However, the base rate changes over time, so it's really important to check the latest figure.

In February, 2025, it was 4.

5%.

For example, if you saved 100 pounds, after a year you would get 4 pounds 50 in interest.

Let's check what we've done so far.

If interest is high, what will happen? Is it A, savings increase slowly.

B, savings increase quickly.

C, debt increases slowly.

Or D, debt increases quickly.

Choose all of the ones that apply.

The correct answers are B and D.

Savings increase quickly, but that also means that debt also increases quickly.

Investments can make more money than savings.

However, there is a financial risk that is not there when you save.

This is because the value of investments can go up or down.

That means that you might end up with getting less back than you put in.

Different investment products have different levels of risk.

Some are potentially more of a risk, but offer higher potential returns while others are generally lower risk, but therefore they're going to grow more slowly.

You have to choose investments based on how much risk you're willing to take, and that might be different at different points.

Some different types of investments include stocks and shares.

This means that you buy a small part of a company.

If the company does well, the value of your shares will increase.

You might also get paid some money.

This is called a dividend.

But if the company struggles, you could lose money that you have invested with into those shares.

You can also invest in a stocks and shares ISA.

People invest in these because they're interested in making bigger profits, but they also come with a higher risk.

Another way to invest money is through bonds.

This means that you lend money to a company or the government, and in return they pay you back with interest over time.

In the UK we also have premium bonds.

These are secured by the Treasury.

You don't gain money on the amount, but you are entered into a prize draw for cash prizes each month, so that means that you might win a cash prize that is worth more than the interest.

Bonds are usually safer than stocks and shares.

They present less risk, but again, the returns can be lower.

Another way to invest money is through funds.

You might put your money into a group of different investments like stocks and bonds.

These funds are put together and managed by experts so the investor doesn't have to make any difficult decisions.

This helps spread the risk, and you can earn money through interest or increasing value.

People choose funds if they're interested in a balanced approach with less risk.

Property is another way to invest money.

If you buy a house, a flat, or building, you might hope that the value is going to go up.

That means that later on you can sell it for more.

You can also rent it out to earn interest in the form of rental income.

This is an example of capital investment.

However, property prices can go up and down.

It is more common to earn money this way than lose, but there is also a risk.

Commodities are where you invest in things.

This might be gold, oil, or crops that people are buying and selling.

The prices change based on the demand at a particular time.

Some people invest in commodities 'cause they're interested in how world events might affect prices.

It can be risky, but it can also make you a lot of money if prices rise globally.

Cryptocurrency is another way that some people invest money.

Some types of cryptocurrency, like Bitcoin, can rise or fall in value very quickly.

Some people earn interest by holding these currencies or make a profit by trading them at the right time.

However, trading these types of currencies is much riskier than investing in bonds, funds, stocks, and shares because prices can change very suddenly.

Let's check what we've done so far.

True or false? Investing in bonds is more of a risk than investing in cryptocurrency.

Pause your video and choose your answer now.

The correct answer is false.

This is because investing in cryptocurrency presents a bigger risk than investing in bonds.

The value of many cryptocurrencies can change suddenly, so you might end up losing money very quickly, whereas bonds are a more stable investment.

Investing and saving is an important part of using money well, budgeting, and also being financially responsible.

There are lots of advantages and disadvantages to both saving and investing.

Some advantages include that you might worry less if there's an emergency 'cause you know that you've put money aside.

Money is available to you if you lose your income.

For example, you're made redundant from your job.

You are able to prepare for the future.

Making plans like buying a house.

You reduce your risk of being in debt 'cause you have some money to fall back on.

And last, you might be ready for large life purchases such as a house.

Some disadvantages might include that you might not get a good return on your investment or saving.

Investing is a bit of a gamble.

You could end up losing money.

You might do less of the things that you enjoy in the present.

You might need to move money quickly, and effectively you've locked it away so it might not be easy to access.

Rising prices might make saving worthless.

Sofia says, "I want to own property so I can make money renting out.

Then I'll have an income and I'll try to invest it in a bond that grows over time." Alex says, "I think I'll invest when I'm much older in a house and maybe some shares because I'd like to take more risks to see if I can get more interest.

When I'm young I think I'd prefer to spend." Both Sofia and Alex have very sensible ideas for what they're going to do with their money.

They're different, but they're both based on being critical and having a think about it.

What are the advantages of saving? Is it A, you might not get a good return.

B, it prepares you for the future.

C, you do more of what you enjoy in the present.

Or D, it makes you ready for large life purchases.

Pause your video and choose any that apply.

The correct answer is B and D.

Well done if you've got those right.

I'd like you to answer the following questions about how and why people invest money.

I'd like you to explain your answers in full sentences.

The first question is, why do people invest money instead of just keeping it in cash? Next, choose two types of investments and explain how they work.

Next, which type of investment do you think is the riskiest and why? And last, if you wanted to invest safely which option would be best for you? Explain your choice.

Pause your video, and have a go at this now.

I asked you to answer some questions about investing and saving.

Your answers might have included some of the following.

People invest money to grow their wealth over time.

Unlike keeping cash, investments can increase in value and provide extra income.

Some types of investment might include stocks and shares.

This is where you buy a small part of a company.

If it then does well, the value of the shares goes up.

Investors can make a profit by selling them or receiving dividends.

However, if the company does badly, shares can lose value.

Another type might have been bonds.

This is where you lend money to a company or the government and in return they pay you back with interest over time.

Bonds are usually safer than stocks and shares, but they might have lower returns.

In terms of investments that might be the riskiest, you could have said, "Cryptocurrency is the riskiest investment because its value can change very quickly.

This means that it's also easy to lose money very quickly." Lastly, thinking about how you might invest, you might have said, "A fund would be a safe option because it spreads money across different investments, therefore reducing risk.

Furthermore, since a professional manages it, investors don't have to make all the decisions themselves, and the professional will take advantage of the best investment opportunities.

Another safe choice is bonds because they offer high interest and a good return.

They're less likely to lose value than investments like stocks and shares." Well done if you included some of that in your answer.

Today we have been learning about where we can save money.

We've learned there are different ways to save, like money boxes, jam jar accounts, instant access, notice accounts, and cash ISAs.

Each option offers different interest rates.

Being a critical consumer helps people save wisely by avoiding impulse purchases.

Finding the best interest rate can also help people save more effectively and make their money grow over time.

The MPC sets the Bank of England base rate, influencing savings and investments.

Investing in stocks, bonds, funds, property, commodities, or cryptocurrency can grow money, but it involves risk.

High risk investments like stocks and shares offer bigger returns, while safer options like bonds and funds provide steady growth.

Thank you for joining me in today's lesson.