Charlotte Ransom spent 25 years working for huge investment banking firms JP Morgan and Goldman Sachs, so it’s fair to say she knows a thing or two about managing money
A former banker has shared a straightforward three-step method that she claims saved her thousands of pounds.
Charlotte Ransom, who spent 25 years working for major investment banking firms JP Morgan and Goldman Sachs, certainly knows a thing or two about money management.
The ex-banker emphasises that managing your personal finances is all about balance, something she admits she overlooked while handling large portfolios at work. Charlotte asserts that adopting her method saved her “thousands of pounds”.
Speaking to The Times, she said: “It’s high time that more people split out their savings to make full use of their tax-free allowances and benefit from inflation-beating returns.
“There’s a simple but transformational framework that can help you do this efficiently regardless of how much money you have. I call it the three pot theory – and it’s saved me tens of thousands of pounds,” reports the Express.
Charlotte advises splitting your money into three pots, with the first being your ‘liquid base’. This is likely to be your current account where your salary is deposited and from which you pay monthly outgoings like your rent or mortgage, bills and groceries.
She refers to the second pot as your ‘sleep well core’. This can include investments like ISAs and pensions, where you can build wealth steadily and see returns over the medium to long-term.
Then the third pot is where people can make more risky, high upside investments. She calls this pot your ‘passion play’.
She says: “It’s exciting and rewarding but you can’t bank on it for day-to-day living.”
Charlotte, who currently serves as founder and chief executive of wealth management firm Netwealth, says embracing this approach has been a “total game changer”.
She maintains the combination is vital because keeping too much cash in pot one will cause you to miss out on chances for growing wealth.
Charlotte revealed she hadn’t organised her pots in years before taking control of her personal finances. She believes this will help ease your worries in the future alongside greater financial freedom.
It follows Martin Lewis issuing a fresh “tax rise alert” to people with savings accounts. The money saving guru has cautioned savers they could face additional tax following Rachel Reeves‘ Budget on Wednesday.
Savers who fail to keep money in tax-free wrappers, such as ISAs, are poised to see a tax increase on interest they earn if they breach the threshold.
Ms Reeves will raise the tax on savings interest by 2% across every bracket level, taking effect April 6, 2027. This means if your savings interest surpasses your personal allowance, a steeper tax rate will be imposed.
The personal savings allowance permits basic rate taxpayers to earn up to £1,000 in interest before paying tax, whilst higher rate taxpayers have a £500 allowance. Additional rate taxpayers receive no exemption.
The new tax rates on cash savings will be 22% for basic rate taxpayers, 42% for higher rate payers and 47% for additional rate taxpayers.
Mr Lewis stated: “An Additional 2% tax on savings (and property and dividends). So if you pay tax on savings (i.e. on interest above the personal savings allowance and outside of ISAs), the tax will rise to 22% from April 2027.”