Can I open an ISA on a lower budget? 

Berry Mathew

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Can I open an ISA on a lower budget? 

Thinking of working on your finances this year? Despite sky-high energy prices and unprecedented costs for household heating, it’s a critical time for individuals and families to make the most out of their money. Whether you’re struggling to find different ways to save money or thinking of saving up for your first home, it’s always worth learning how opening an ISA could help you.

What is an ISA?

An Individual Savings Account, more commonly known as an ISA, is a type of bank account designed to help you make the most of your savings. The main difference between an ISA and a regular savings account is that you’ll benefit from tax-free interest payments. While this might only make a small impact at first, you could get much more for your money eventually. 

How does an ISA work?

The way you use your ISA will be determined by the type of account you open. While many people might think these types of savings accounts are complicated, an ISA is just a dedicated account to help you make tax-free savings. The most popular types of ISA in the UK include:

  • Cash ISAs

Cash ISAs enable risk-free savings. There’s never any tax to pay on interest – and you’ll be able to withdraw as much or as little cash as you’d like to. Any interest you earn with one of these accounts won’t count towards your personal savings allowance. 

In turn, you can protect more of the interest you earn with a cash ISA. Individuals can save up to £85,000, but you might need to meet a minimum requirement over a twelve-month period to open an account. 

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  • Stocks & Shares ISAs

You can also open an ISA with the specific intention to invest. With a stocks & shares ISA, you can invest in funds, bonds, and shares in private companies. Investing always comes with a risk, so it’s worth doing your research if you’re thinking about opening this type of account.

Additionally, stocks & shares ISAs might not be the most accessible type for those on a budget. Most of these accounts require applicants to pay various fees, which could include a flat fee to use an investment platform, trading fees, and an annual charge for account management. 

  • Lifetime ISAs

Launched in 2017, Lifetime ISAs aim to help people save either for buying their first home or in preparation for retirement. Account holders can save up to £4,000 per tax year, which can be saved either in one lump sum or by making cash deposits whenever you can.

You can only open a Lifetime ISA if you’re aged between 18 and 39 years old. If you’re over 40, you can’t open a new account, but you can still pay deposits into an existing one until you’re 50. With a Lifetime ISA, your savings will be safe and protected. 

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How can I open an ISA on a budget?

If you’re on a low budget, chances are that you can still open an ISA. You can open some ISAs with as little as just £1, but you should still expect to meet minimum monthly payments. Depending on your chosen bank, these can be as low as £30 per month throughout your first year of saving.

However, you may need to consider opening a new Help to Save account if you’re receiving Universal Credit or Working Tax Credit. This government initiative will help you save by awarding a bonus of 50p for every £1 saved over four years. 


When you open an ISA, you can save money without risk, no matter how much interest you earn. You might not be able to move all your savings straight away, but saving in good time will help you in the long run. If you can meet minimum monthly payments, an ISA should be at the top of your list of financial priorities for 2023.