How to save... but not scrimp
Plan ahead to ensure you enjoy your retirement
Saving up doesn’t mean you need to be a Scrooge.
People often tell me: “I don’t want to live like a miser now just so I can retire rich… I may never make it!”
To which I reply: “I don’t want you to be a miser either – be a conscious spender instead.”
Being a conscious spender is all about being frugal, not being a Scrooge. It’s not about denying yourself life’s pleasures – it’s about being aware of your outgoings and focusing on a few financial priorities.
One of the easiest ways to be more aware of your spending is by doing something that most of us already do: compare prices.
Shopping around is common sense to me and I have always done it.
Most other people do, too. Before making a big purchase, 86% of Brits look for good deals.
But that means 14% are missing out on potentially significant savings by purchasing at the first price they see.
Saving by the numbers
Price-comparison site idealo delved into its data to find out which kinds of people do the most comparing.
They looked at who was comparing prices on a range of products including insurance, holidays, flights, food, electronics, clothes, utilities and mobile phone contracts to understand patterns by demographic or location.
The data revealed Geordies are missing out on the most deals as 22% don’t shop around.
One in five Brits over 55 never consider price comparison, but 90% of under-24s always compare deals.
So what does this mean in terms of numbers? The data says we’re overspending by an average £365 if we don’t price-compare when buying a new TV, an average of £91 if we don’t compare prices on laptops and £65 if we don’t shop around for fridge/ freezer deals. Food for thought.
Looking ahead
Life is short, and while I don’t think you should ever put your life on hold for retirement, you must ensure you live your whole life, not just your working life, comfortably.
How long is that? According to the Office for National Statistics, the average person of working age will live well into their mid-80s – but you may not be average and could live for much longer than that.
That’s more than 20 years past the state retirement age – a long, miserable 20 years if you don’t have enough retirement savings behind you.
So while I don’t recommend living like Ebenezer, I do recommend making practical changes. If you’re going out to work, taking your own lunch could save you £1,300 a year.
If you took the money you would normally spend on sandwiches and invested it into a pension at 8% pa over 20 years, you’d have a whopping £77,000 extra in your account.
Increase your savings each year – like the cost of your lunch would gradually increase – and that additional pension fund could jump to more than £96,500.
I want people to enjoy the process of money management both now and at the end of working life. Don’t be a Scrooge – just be sensible.
For more great money planning ideas, search for the Money Planner podcast online.