Martin Lewis warns his ‘perfect’ saving method is ‘not for most people | Personal Finance | Finance
Martin Lewis has revealed his ideal method for managing savings accounts, but he admits it’s only suitable for those who are willing to “be constantly on top of it”.
On BBC Radio 5, Martin Lewis reminisced about how he used to demonstrate the best strategy for eager savers using rows of champagne glasses and the “cheapest possible pomade”.
He suggested that people should view their savings as a tower of champagne glasses and their income as the champagne bottle. The idea is to start at the top and let the money trickle down, filling each glass before moving to the next level.
Speaking on the Martin Lewis Podcast, he explained: “The perfect way to save is you pour your money into the account that pays the most. It might be tax-free, it might be because it only allows a small amount.
“Once you fill that, you trickle down to the next level then trickle down to the next level..”
However, Martin also highlighted a drawback to this method. He pointed out that a successful saving strategy depends on “how hard you want to work” and admitted his trickle-down method is “not for most people because it takes too much work”.
He added: “The biggest sin in savings is that most decent rates only last for a year or so and then you have to be on top of it to ditch and switch when it ends.
“It’s only for the type of people who will be constantly on top of it, maybe even modelling it through a spreadsheet to manage it well.”
“Most people want a simpler solution with 2, 3 maybe 4 accounts at most but not going into 10 different accounts.”
He also shared some vital tips for these exact people who don’t necessarily want to be tied down to grueling work around their savings.
Outlining some simple values he encouraged savers to keep in mind, Martin elaborated: “Savings is one of the simplest things to sort out. You go and check your rate, unless you’re locked into an account all you simply need to do is move your money to another savings account. Only slight caveat is if your money is in an ISA when you do a transfer and not a withdrawal.”
“Let’s start with the bog standard thing you look at, easy access savings. There’s normal savings that usually pay better and cash ISAs. Cash ISA’s are a tax-free savings account, where your interest is never taxed. You can put £20,000 in an ISA each year, if you’re lucky enough to be able to max it out.”
“The problem with cash ISAs is normally the top rate are worse than the top normal savings rate.”
