As children, many of us began saving by plugging our pocket money into a piggy bank. It's a good early lesson in money management, but as adults, it's necessary to do more than just stash your cash under the bed.

But before starting to put your hard earned money into a savings account, you should first pay off any significant debts you may have. This is because the rate of interest on loans is generally higher than the maximum interest on savings accounts. Therefore it makes financial sense to pay off these debts before starting to save.

The one exception to this rule is the student loan. According to Student Finance Direct: "All student loans accrue interest which is linked to the rate of inflation in line with the Retail Prices Index. This means that in real terms, the amount you pay back will have broadly the same value as the amount you have borrowed and no profit is made on the loan itself. Interest accrues on your loan until it has been repaid in full. The current interest rate is 2.4%".

If your only debt is a student loan, then you would be better off financially, by putting your money into a high interest savings account and paying off the loan in small amounts when you have a bit of spare money.

Due to inflation, if your money is not invested or placed in an account that is earning more than the current rate of inflation, you are actually losing money. Therefore it is essential that you save your money in an account that offers an interest rate that is above the current rate of inflation.

There are a number of factors to bear in mind when choosing a savings account. Do you want to have instant access to your money, or are you happy to give weeks or months notice? Do you want an account that is accessible online, or would you prefer to have a face to face service with a real person?

The general advice for new savers is to first open what's called an ISA (Individual Savings Account). This is a savings account in which you can put a maximum of 3000 per year and you are not charged tax on the interest earned. Like other savings accounts, the rates can vary from bank to bank, and unless the ISA is a fixed rate account, the interest can change over time. Therefore it's a good idea to always check on interest rates every few months.

If you have in excess of 3000 to save, then there are plenty of high interest accounts, including internet saving accounts savings bonds and instant access savings accounts accessible through your local branch, telephone, and ATMs.

As there are so many choices of bank and building society, it pays to shop around and check all the various offers and interest rates. Sometimes banks offer high interest rates to attract customers, which are then reduced after six months or a year, so it can pay to keep an eye on the highest interest savings account and move your money around.

Paul McIndoe is an online, freelance financial journalist. He lives in Edinburgh with his two dogs.

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