I've saved £100,000 by 32 by following strict rules
In all honesty, my own personal credo has been to say: Buy what you need, and invest the rest.
From my mid-twenties up to the present, I have had contributions from both a workplace pension and a private pension.
I aim to save at least half a million pounds. I'll utilise this sum to purchase a retirement cottage and potentially embark on European cruises.
This scares me so much that I'm proactively taking steps to secure my financial future and prevent financial difficulties down the line.
My prudent handling of finances particularly developed at university from October 2011.
Receiving maintenance grants was the first time I see substantial amounts of money going into my bank account. It was this that made me decide I would never take money for granted.
I had some part-time work at university, promoting the place to prospective students during open days, which helped bring in some extra money.
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Right now, my current monthly earnings exceed £4,000.
This is comprised of approximately £3,000 from my employment income (excluding work pension contributions), £500 from interest on my bank savings and at least £500 from investing in undervalued shares – which I began following in 2015.
Fixed-term deposit accounts and instant access savings accounts.
As for my pension, I observe the 'half your age' rule, which means that you contribute half of your age into your pension each month in order to get the maximum benefit possible from your pension. For example, if you are 30 years of age, you would pay in 15% of your income towards your pension every month.
However, this savings strategy comes at a price and is underpinned by everyday thrift.
I'm not bothered with paying for meals I can cook myself. So I go about each morning with a bowl of oats, which I purchase in bulk for 90p for a 1kg packet.
For lunch, I usually vary between having chicken fillet and lettuce, salad tomato sandwiches, or noodles with a boiled egg. I prepare a container of seasoned chicken fillet strips that I can use a few times a week.
Dinner could consist of a large pot of homemade chicken fried rice mixed with assorted vegetables and prawns, or, alternatively, you could have pasta with a side of meat, or a veggie casserole to eat.
I don’t spend money on the Emotional Depreciable Assets (EDAs) I've termed, which are purchases driven by emotions and experience consequent depreciation.
For instance, I don't own a car and even assisted a friend in selling one of their two cars for £500, despite it being a model that's been on the market for over 30 years. This was after I had explained EDA to them, at which point they realised they didn't necessarily 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 back in 2019.
I'm not one for socialising in that way, which is why I've never had a drink or smoked.
I only attend the weddings or birthdays of people extremely close to me. If I don't feel that an invitation is worth my while, I politely decline.
I'm sometimes quite sociable, but I don't feel like I'm missing out on anything. I'm perfectly happy just relaxing at home, putting a nutritious meal on the table and enjoying TV programmes like EastEnders!
I'm often surprised by how understanding people are when I explain this to them. Several people have told me they're likewise opting to spend more evenings at home nowadays due to the cost of living becoming increasingly unaffordable.
It might seem testing, but, seeing six-figures in my pension fund makes me realise it is not only achievable by lessening my wants and cutting waste out, but it’s also worth every sacrifice I make. I'd rather save sensibly during my younger years so I can treat myself later in life.
Ultimately, having a six-figure pension pot is not just a matter of prestige; I firmly believe it's also an economic imperative for everyone, given that people are now living longer.
Of course, some individuals cannot accumulate a pension fund because they simply do not earn a sufficient income, so the state should increase tax relief for the lowest earners to boost their pension savings.
Your pension may not seem a priority at the moment if you're still young, but investing in it now will earn you gratitude from your future self.
This article was originally published on 6 January, 2025.
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