A Millionaire is made £3.50 at a Time

This blog post is (not-so) shamelessly inspired by my all-time inspiration into personal finance, Mr Money Mustache. His original blog, of the same title, can be found here.

I was at a friend's house recently for lunch, and we got onto the topic of enjoying life while you can, before you inevitably degrade into a shadow of your former self and end up in a care home. We ended up discussing food (we ate perhaps the best chips I've ever had), and on the subject of discussing the differing expenses of the various UK supermarket chains, the conversation went something like this:

"I go to Marks and Spencers to buy these [steaks], although they are less expensive at Sainsbury's or Tesco. I don't worry about the difference in price. £3.50 is nothing to me."

Immediately my spider-senses started tingling, and I started to think of Mr Money Mustache. In an absolute sense, £3.50 may not seem like a lot of money, but actually you can get far more for it than you may think.

This is enough to charge your medium-sized EV by ~65%, potentially giving you up to 180 miles of range (using the cheapest overnight charging tariff at ~7p/kWh). Alternatively, it's enough to provide a day's worth of gas and electricity to your house, providing you with blissfully hot showers and keeping the inside cosy warm.

For the price of a Grande Latte in Starbucks (~£3.65), you could get a week's worth of oats and milk for breakfast - a staple food and source of high protein and fibre that your body digests to slowly and stably release energy for you throughout the morning. Millions of people eat this nutritious breakfast every day.

You could get ~50 cups of delicious instant coffee to kick-start your days (using a quality brand like Nescafe), or around 30-35 cups of filtered coffee for your home-brewing barista kit. Alternatively, you could get enough beans, rice and pasta to last a month or more. There's nothing wrong with eating beans and rice - nutritionally at least they provide you with a lot of protein, carbohydrate and fibre.

There's a lot you can do with £3.50, so we should respect it. Money doesn't grow on trees. It's this mindset, when scaled up over multiple purchases, which contributes to long-term wealth.

On the smallest scale, simply buying one fewer Starbucks coffee per week will save you £182 a year. If you invested this much money in the stock market over 30 years, you'd have £10,346 after inflation(!) Suddenly we have a very big number which has compounded out of lots of little decisions. Now we begin to see how consciously deciding not to buy a few things every week soon compounds into big amounts of money.

Subscribing to one fewer streaming service (~£10 per month), eating out one time fewer (~£35 per month), shopping around to find the cheapest gas/electric/internet/phone providers (~£20 per month), opting to buy less meat and shop at a less expensive supermarket (~£30 per month), and looking for bargain holiday deals on price comparison websites (~£50 per month) can get the ball rolling. More significant conscious decisions like deciding to cycle to work when the weather is good (~£70 per month), and owning a small, inexpensive car (~£300 per month) suddenly change the game.

Now you're saving £515 per month! BAM. That's big money all of a sudden from a load of relatively small changes which are unlikely to affect your lifestyle much. Invested and compounded into the stock market over 30 years, you'd have over £357,860 after inflation(!) A couple could get this done much faster, and would have £715,721 after 30 years. With a paid-off house, a family of four should easily be able to live on £20,000 per year if they don't make ridiculous purchasing decisions (buy second hand, cycle as much as possible, spend time entertaining and looking after the kids rather than paying someone else to).

Assuming a safe withdrawal rate of 4%, it would take ~24 years to have enough money to retire properly (£500,000). Assuming you want to get off your ass and work a few hours a week, you could earn £10,000 per year between the two of you, and suddenly you only need £250,000 to retire! And that would only take 15 years to reach.

I'm not advocating stripping out everything you enjoy from your life right now in order to save as much as possible - you have to enjoy life. But even a modest amount of streamlining can push forward your retirement date by decades.

I haven't even covered the biggest factors in your finances - where you choose to live and how you progress in your career. These are, by far, the two biggest impactors on your financial life. Yes, you can spend 30 years living relatively frugally and you'll have enough to retire on, but you might do this with some dead-end job that's boring and doesn't pay well. By focussing on your career - working your ass off and getting promotions - while making sure to negotiate your salary at every appriasal, your work-generated income will skyrocket. And choosing to live in a lower cost-of living area which is relatively near work will further help you to double-down on your savings.

All of a sudden, you'll find yourself saving thousands of pounds a month, and money will be as abundant as rain in the Lake District. Very soon, you'll be skyrocketing up the road to financial freedom, and can be retired as a couple in less than 10 years!

This is the sort of positive mindset and 10x thinking that is required if you, the regular person, wish to become a millionaire.