My life motto has always been: Buy what you need, and invest the rest.
This attitude towards money has helped me accumulate over £100,000 in retirement savings since my mid-20s from a workplace and private pension.
I’m 32 now but I aim to retire by 58 with a pension pot of at least £500,000. I’ll use this pot to purchase a retirement cottage and perhaps go on European cruises.
Reports that millions of pensioners are living in poverty and that most of us are not saving enough for our retirement terrifies me. That is why I am taking action to avoid financial hardship in later life.
My careful handling of money particularly developed at university from October 2011.
Receiving maintenance grants was the first time I saw four-figure sums enter my bank account. This was when I decided I would never take money for granted.
I had some casual shifts at university working as a student brand ambassador on open days, which helped me earn some extra cash.
But it was in my first job as a press officer in 2015 when I received my first pension statement that I became interested in pensions. Seeing the estimated value of my pension in retirement inspired me to boost my contributions to have a comfortable retirement.
Today, as it currently stands, my income is over £4,000 per month.
This is made up of roughly £3,000 from employment (minus workplace pension contributions), £500 from my bank savings interest and at least £500 from investing in undervalued stocks – which I started following in 2015.
My monthly expenses are over £1,400 for my housing, utilities and food costs. I set aside £750 per month for my pension and I split the rest between tax-free cash-ISAs, instant access and fixed-term bond accounts.
As for my pension, I follow the ‘half your age’ rule, which means that you pay half of your age into your pension every month to get as much out of your pension as possible. For example, if you are 30 years of age, you would pay 15% into your pension.
But this savings strategy comes at a cost and is underpinned by day-to-day frugality.
A typical day means sticking to my ‘no-meals out’ rule. I prepare my breakfast, lunch and dinner because I don’t see the point in paying for meals I can cook. So I start each day with a bowl of oats, which I buy in bulk for just 90p for a 1kg packet.
For lunch, I tend to rotate between either chicken fillet and lettuce, or salad tomato sandwiches or noodles with a boiled egg. I cook a container of seasoned chicken fillet strips that I can use several times a week.
Dinner includes either a batched pot of homemade chicken fried rice with mixed vegetables and king prawns, pasta served with a portion of meat, or veggie casserole.
I don’t spend money on what I coined as Emotional Depreciable Assets (or EDA), which are purchases driven by feelings and/or decreases in value like.
For example, I don’t own a car and even helped a friend sell one of their two cars for £500 (despite the model being launched over 30 years ago) as after I explained EDA to them they realised that they did not need to own both.
I also don’t go on foreign holidays. I have only flown abroad three times with my family and the last time I did that was in 2019.
If I don’t need it, I don’t do it. That extends to socialising too and is why I’ve never drunk alcohol or smoked.
My commitment to frugality means that I only attend the weddings or birthdays of very close family members. If I don’t feel that going somewhere is value for money, I politely decline.
While I can be extroverted, I don’t feel like I am missing out on anything. I am content being at peace at home enjoying a nutritious meal and watching EastEnders!
Surprisingly, I tend to get an understanding response from people when I explain this. Some tell me they prefer to spend more nights in now too due to the cost-of-living crisis.
It might seem challenging but, seeing six-figures in my pension pot makes me realise it is not only achievable by reducing wants and eliminating waste but it’s also worth every sacrifice. I’d rather save wisely during my younger years so that I can reward myself later in life.
At the end of the day, having a six-figure pension pot is not important because it looks good on paper, but I believe that it is also an economic necessity for everyone because we are living longer.
Of course, some people can’t build up a pension fund because they simply don’t earn enough, so the state should increase the tax relief for the lowest earners to boost their pension pots.
Your pension might not seem important today if you’re young, but if you invest in it now, your older self will thank you for it.
Do you have a story you’d like to share? Get in touch by emailing jess.austin@metro.co.uk.
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