New Year, New Financial Focus

It’s time to embrace a fresh start in the new year! Whether you’re gearing up to try pickleball for the first time, perfecting your macramé skills, or simply determined to prioritise some much-needed self-care, it’s also the perfect opportunity to give your savings some attention

 
According to recent research from Shawbrook*, 35% of savers plan to use their savings for living costs in later life, yet a surprising one-third (33%) have never switched savings accounts. This could mean missing out on better interest rates and more substantial returns. As you look ahead to new opportunities this year, it’s worth taking a moment to reassess your savings strategy. A simple switch could lead to a more secure financial future.
 
Adam Thrower, head of savings at Shawbrook gives savers a steer on where to focus to improve your savings in 2025:
 
Update your Savings Goals: 
 
Now is the perfect time to find a savings account that truly fits your needs. Fixed Rate accounts are becoming increasingly popular as savers look to lock in higher rates before potential declines in the Bank of England’s base rate. It’s important, though, to assess your individual financial goals and consider whether a longer-term commitment aligns with your plans. Make sure the account you choose supports your long-term strategy.

For the 35% of savers who plan to use their savings for living costs in later life, locking funds into Fixed Rate accounts can be a smart move to support long-term goals like retirement or future property plans. On the other hand, if you’re among the 41% who prefer to keep savings accessible for shorter-term needs—such as holidays or emergencies—an Easy Access or Notice Account offers flexibility, allowing you to withdraw funds when needed without early withdrawal penalties
 
Switch your way to a brighter future: 
 
As you plan to save in the new year, focus not only on what you’re depositing, but also on the returns your provider is offering. While it’s easy to stick with what you have, this could mean missing out on higher interest rates elsewhere. In fact, 33% of savers have never switched accounts, potentially leaving better returns on the table. By exploring your options, you could significantly boost your savings—don’t let complacency stand in the way of reaching your financial goals.
 
Look beyond the High Street: 
 
Familiarity can be a drawback when it comes to saving. It’s important not to limit yourself to the ‘big names’ without exploring other options. Many top savings providers don’t have a high street presence, so taking the time to compare all available rates ensures your money works harder for you.
 
Be tax aware: 
 
Finally, when sorting out your finances for the New Year, tax should be a key consideration. With the Personal Savings Allowance (PSA) remaining at £1,000 for basic rate taxpayers, it is possible to breach the tax-free threshold for interest payments, which could cost you hundreds a year. Currently a higher rate taxpayer who saves £10,500 in a leading one-year fixed account (4.85% AER)** would put them over the personal savings allowance. Similarly, for a basic rate taxpayer, £20,700 in the same account could see them go over the threshold.  You can now open and contribute (up to £20,000 per year) to more than one ISA of the same type in the same tax year, which means you can switch providers to find better rates without closing your original ISA
 

_{*The research was conducted by Censuswide with 2,011 UK consumers aged 55-68 between 27/06/24-3/07/24. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles and are members of The British Polling Council.}

 
**https://www.thetimes.com/money-mentor/banking-saving/best-fixed-rate-savings-accounts