Worried you don’t have enough cash for a comfortable retirement and you’ll struggle to get by on the State Pension of £168.60 per week? And you don’t know how you can save more money to invest? Here are three thoughts.
Write it down
Get out your pen and start making records — or use a spreadsheet or whatever.
If you don’t measure something, you can’t improve it. It’s essential in business, and I think it’s essential if you’re working on personal finance goals too.
How much do you spend each month? On each kind of expenditure? I suggest you make a record of every single penny you spend, for a whole month. Maybe carry a small notebook, so you don’t forget any minor expenses when you’re out and about.
Don’t try to rein in your spending for that month, just carry on as usual so that you can get an accurate record of where all the money goes. Last time I did this, I realised I was spending about £100 per month on hot takeaway lunches — I’ve since cut that down to around £20.
The car
And the money people spend on cars and transport! Add your monthly fuel spend to your annual tax and insurance and the cost of the car itself, and you could stand a chance of damaging your blood pressure.
Most people need a car, but could you run a cheaper one? I have a friend whose approach looks perfect to me. He has a small car, plenty good enough for his daily needs, and he drives it carefully. It’s in a low insurance bracket, offers very good mileage, and maintenance is easy and cheap — his MOT usually costs peanuts. And he intends to run it until it wears out. If he wants to drive long distances (for a week’s break, for example), he’ll hire a beefier one (and get recovery services into the bargain.)
Why am I not not using myself as an example? Well, I have the cheapest approach to driving that’s possible — I have no car at all. I use legs, bicycle, buses and local trains (and I don’t even pay for them, as we get old age travel passes at 60 where I live).
Phone and telly
Young people often laugh at me when I’m unable to open up the latest app on my phone, check the weather, the football scores, or thumb my way through conversations rather than walking over to people and just talking the usual way.
That’s because my mobile phone is an old pay-as-you-go Nokia brick, on which I spend £10 every three months. I have friends who have phones costing hundreds of pounds, and they spend £30 or more per month on their phone packages.
And don’t get me started on the cash I see people wasting on expensive TV services like satellite, cable, Netflix, or whatever you call them. Game of Thrones? Game of comfy old pensioner for me.
The difference
Once you have a handle on what you spend and where you can cut down, have a think about this… Every £100 per month you save, if invested at the historic UK stock market average total return of 8% per year, would turn into £18,000 in 10 years. And £57,000 in 20 years.