A finance expert is advising individuals in the UK to take a specific action before their January payday in order to potentially unlock savings of up to £1,164.
Rajan Lakhani, who heads the Money department at the financial management app Plum, is recommending that people establish an “autosave” rule within their banking application.
An “autosave” rule is a functionality in a banking app that automatically moves funds into a savings account or investment portfolio at regular intervals.
The purpose of this feature is to eliminate the need for manual transfers of money into a savings account.
Based on an analysis by Plum, the average worker utilized auto-saving tools to save £97 per month in 2025.
By implementing this strategy starting in January, individuals could amass £1,164 by the year’s end. If these funds are deposited into a high-interest savings account with a rate exceeding 4%, the savings could potentially grow to around £1,210.
Some of the popular digital banks offering “autosave” features include Monzo, Starling, Revolut, and Chase.
Rajan Lakhani emphasized, “Creating a payday autosaver can offer a hassle-free way to save each month, aiding in maintaining consistency and achieving long-term financial objectives.”
He added, “It’s a simple step everyone can take before January payday to build savings almost effortlessly.”
“By automatically allocating a portion of your income every payday, you are developing strong financial habits and building a safety net of savings that can offer significant peace of mind.”
“These funds could be directed towards a major financial goal, such as a house deposit, or be used to cover unforeseen expenses.”
For basic-rate taxpayers, there is a personal savings allowance allowing them to earn up to £1,000 in savings interest annually before being subject to tax. Higher-rate taxpayers face a 40% tax rate when their savings interest exceeds £500 annually.
Additional rate taxpayers are taxed at 45% on all savings interest. AJ Bell’s analysis indicates that 2.64 million individuals will face taxes on savings in the 2025/26 tax year.
Savings held in an ISA account are not taxed. Individuals can save up to £20,000 across various ISA accounts annually, but the cash ISA limit will be reduced to £12,000 for under-65s starting from April 2027.
The overall ISA limit remains at £20,000, allowing individuals under 65 to split their savings between a cash ISA and a stocks and shares ISA.
People over 65 are unaffected by the new cap and can continue saving up to £20,000 annually in a cash ISA.
Opt for Daily Mirror as a ‘Preferred Source’ on Google News for convenient access to the news that matters to you.