Britons are being reminded to take advantage of a “simple” savings hack which could boost your fund by nearly £1,400 a year.
There are multiple savings challenges people can take part in to start putting money away for a rainy day.
One in particular encourages people to save a little bit of money to begin with before depositing larger amounts in savings pots.
Known as the 52 Week Challenge, it is used by thousands of people every year to begin their savings journey.
Savings challenges are useful ways for people to get into putting money away
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Rajan Lakhani, the personal finance expert at Plum, said it is a “simple” way for people to begin saving.
He told GB News: “It can be hard to motivate yourself to save, especially if you don’t feel like you have much to set aside. Setting yourself a saving challenge will help those pennies build up to pounds.
“A good one to start in January is the 52 Week Challenge, which is based on the idea that tucking money away little and often will help you set more aside in the long term.
“The concept is very simple. Start with £1, then deposit £1 more than you did in the previous week… and repeat this for a year.
“That means you’ll be putting aside £52 in the final week of the challenge. And you’ll make a total of £1,378 over the course of a year.”
The finance expert urged people to be aware of their tax obligations when it comes to saving money.
The personal savings allowance (PSA) is the amount someone can earn in interest before having to pay tax.
Once this threshold is breached, a savers’ interest over this amount will form part of their earnings and be taxed at their rate of income tax.
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According to Plum’s expert, ISAs are useful tools in avoiding a potential levy on savings from HM Revenue and Customers (HMRC).
Mr Lakhani added: “As we head towards the deadline for complete self-assessment tax returns, more people will need to think about calculating the tax on their savings due to increased interest rates.
“It’s important to look at your savings holistically and make sure that you are not paying more tax than you should be by putting your money in an Individual Savings Account (ISA).
“Rates on Cash ISAs are becoming favourable at the moment so this is one worth thinking about for 2024."
