Martin Lewis details the ‘perfect way to save’ that only some people can follow

Martin Lewis shared his best savings strategy, recalling on BBC Radio 5 how he used to window shop for low-cost savers, with rows of champagne glasses and “the cheapest possible pomade”. He explained that people should treat their savings like a tower of champagne glasses and their income like a bottle of champagne, positioned at the top and letting the drink trickle down and fill each glass before going. at the lower level.

Putting it in financial terms on the Martin Lewis podcast, he shared: “The perfect way to save is to put 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, go to the next level, then go to the next level…”

However, this method also has a caveat, as Martin pointed out that a successful savings strategy is directly related to “how hard you want to work” and admitted that his trickle-down method “isn’t for most people because it requires too much work.”

He continued: “The biggest sin in savings is that most decent rates only last a year or so, then you have to be at the top to give up and switch when it’s over. It’s only for the type of people who will be constantly on top of it, maybe even modeling it through a spreadsheet to manage it well.

“Most people want a simpler solution with 2, 3, maybe 4 accounts at most, but without going into 10 different accounts.” He also shared some essential tips for these people who don’t necessarily want to be tied down with the tedious work around their savings.

Outlining some simple values ​​he encouraged savers to keep in mind, Martin explained: “Savings are one of the easiest things to deal with. Go and check the rate, unless you are locked into one account, all you have to do is move your money to another savings account. Just a small caveat is if your money is in an ISA when you make a transfer and not a withdrawal.

“Let’s start with the bog standard you’re looking at, easy access savings. There are regular savings that usually pay better and cash ISAs. Cash ISAs are a tax-free savings account where your interest is never taxed. You can put £20,000 into an ISA each year if you’re lucky enough to be able to top it.

“The problem with cash ISAs is that the maximum rate is normally lower than the normal maximum savings rate.”