Before your January payday, a personal finance expert suggests a money-saving strategy that could help you accumulate up to £1,164.
Head of Money at the financial management app Plum, Rajan Lakhani, is advocating for the use of an “autosave” rule within banking apps.
This rule enables automatic transfers of funds from your regular account to your savings or investment account at scheduled intervals.
The purpose is to eliminate the need for manual transfers and simplify the process of building your savings.
An analysis conducted by Plum indicates that, on average, individuals used auto-saving functions to save £97 monthly in 2025.
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By initiating this before the end of January, you could have saved £1,164 by the year’s end. If these funds are placed in a high-interest savings account with a rate exceeding 4%, the total savings could grow to approximately £1,210.
Popular digital banks like Monzo, Starling, Revolut, and Chase offer “autosave” features to facilitate this savings method.
Rajan Lakhani from Plum stated, “Creating a payday autosaver is a hassle-free way to save consistently each month, aiding in achieving long-term financial objectives.”
“This simple step taken before January payday can significantly contribute to building savings without much effort on your part.
“By automatically allocating these funds from each paycheck, you are establishing good financial practices and creating a safety net that can offer peace of mind.
“These savings could be directed towards long-term goals such as a home down payment or be kept for unforeseen expenses.”
Basic-rate taxpayers can earn up to £1,000 in savings interest annually before being subject to tax, known as the personal savings allowance.
If this threshold is exceeded, a 20% tax applies to any interest earned above the limit. For higher-rate taxpayers, earning over £500 in savings interest yearly incurs a 40% tax.
Additional rate taxpayers face a 45% tax on all savings interest. AJ Bell’s analysis reveals that 2.64 million individuals will face savings interest tax in the 2025/26 tax year.
No tax is levied on savings held within an ISA account. The current annual limit for saving across various ISA accounts is £20,000, but starting April 2027, the cash ISA limit for under-65s will decrease to £12,000.
The overall ISA limit remains at £20,000. For example, individuals under 65 can save £12,000 in a cash ISA and £8,000 in a stocks and shares ISA.
Over-65s are unaffected by this change and can continue to save up to £20,000 annually in a cash ISA as usual.
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