How a Cash ISA can help you achieve your 2024 financial goals
If you have a financial goal, like saving for a once-in-a-lifetime holiday, putting money away for home renovations, or building a pot for your children’s weddings, you might have considered a cash ISA.
First things first, let’s get clear on what an ISA is. ISA stands for individual savings account.
With an ISA, you don’t pay tax on the interest you earn on your savings, and you have a tax-free allowance of up to £20,000 each year. Here are some ways an ISA could help you reach your financial goals in 2024.
By now, you know that cash ISAs give you a tax-free savings allowance – but if you don’t use it within the year, you lose it. Your allowance doesn’t roll over to the next year. That’s why it’s important to top up before the new tax year begins.
Consider saving as early as you can in the year to make the most of your ISA. You might find topping up regularly with smaller sums of money is a more manageable approach.
Rather than depositing a much larger sum right at the end of the tax year, you could set up a monthly standing order so that by the time April rolls around, having £20,000 in your ISA feels like a more attainable goal.
As well as giving you the opportunity to make tax-free savings, ISAs tend to have favourable interest rates.
Some will have higher interest rates than others so it’s a good idea to do your research. You can view our full range of cash ISAs here.
That’s good news because it gives you flexibility in how you save and could help you reach your financial goals faster. They include easy access, fixed rate and notice.
If you want to limit your access to your ISA and keep your savings intact, you might consider a notice ISA. As the name suggests, with this ISA, you need to observe a notice period before withdrawing funds from your account.
Meanwhile, easy access ISAs allow you to access your money sooner – great if you hit your savings goal early, and want to put your cash towards something luxurious, like a holiday or a new car, for example. A fixed ISA means that you’ll get a fixed rate of interest for a fixed period – depending on the product features and usually, you won’t be able to withdraw until the end of the fixed period without a penalty.
You have flexibility when it comes to transferring current year subscriptions between different ISAs, so you might like to explore different classes of ISAs. They include cash ISAs, stocks and shares ISAs, Lifetime ISAs, and innovative finance ISAs, FYI. You can split your £20,000 allowance across these ISA types.
If you’re married or in a relationship, remember both partners have an individual allowance. That means as a couple, you can save up to £40,000 tax-free.
If you have children aged 18 and under, you can also encourage them to save in an ISA. A Junior ISA has a tax-free savings allowance of up to £9,000.
If each member of the family is saving into an ISA you may find it quicker and easier to achieve your 2024 financial goals.
Bottom line: Make sure to top up if you can, before the end of the next tax year on April 5th 2025. With regular top-ups and a little know-how, you may find hitting your financial goals and saving for the future is easier with an ISA.
