A former banker has offered Brits a simple three-step method that she says saved her thousands of pounds.

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.

The ex-banker says that managing your personal finances is all about balance, something that she admitds she neglected while managing huge portfolios at work. Charlotte claims adopting her method saved her “thousands of pounds”.

She told The Times: “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.”

Charlotte says your money should be split 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.

The second pot is something she dubs your ‘sleep well core’. This can include investments like ISAs and pensions, where you can build wealth steadily and shows 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 is currently the founder and chief executive of the wealth management firm Netwealth, says adopting this method has been a “total game changer”.

She claims the blend is crucial because leaving too much money in pot one will lead you to miss opportunities for building wealth.

Charlotte said she hadn’t sorted through her pots in years before getting a handle on her personal finances. She reckons this will help put your mind at ease in the future along with more financial freedom.

It comes after Martin Lewis issued a new “tax rise alert” to people with savings accounts. The money saving expert has warned savers they could face more tax following Rachel Reeves‘ Budget on Wednesday. Savers who do not keep money in tax-free wrappers, such as ISAs, are set to see a tax hike on interest they earn if they cross the threshold.

Ms Reeves will increase the tax on savings interest by 2% across every bracket level, effective April 6, 2027. This means if your savings interest exceeds your personal allowance, a higher tax rate will apply. The personal savings allowance allows basic rate taxpayers to earn up to £1,000 in interest before paying tax, while 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 said: “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.”