Blog every day in May topic – A piece of advice you have for others. Anything at all.
I’m going to put down two pieces of advice I think, because they can both fall under the same ‘Start now’ heading. They also both fit in with my desire to prepare for things, or at least to feel like I’ve done what I can to prepare for them.
Piece of advice 1 – Save for when you’re old
Lots of young people don’t do this. They don’t have a pension, they don’t put any savings away, they don’t think about where they’re going to live when they’re old or how they’ll pay their mortgage or rent. It’s not surprising – it feels like it’s a long way away, and it’s not particularly exciting, and preparing for when you’re old can mean giving up some things when you’re young. You can’t start a pension, for example, without giving up some of your salary every month. Salary which could be spent on trainers and gadgets and shots.
However, the reason my advice is to start now is because it’s much, much easier to save up a lot of money if you save a little bit, regularly, over a longer period of time. This is due to the wonder of compound interest. Compound interest is your friend, and it means putting away even just £20 a month over 20 years can give you vastly more money at the end than putting away £100 every month but only for the last four years of that period. Both of them mean saving £4,800 of capital, but the end result is quite different.
£20 a month over the longer period, at an arbitrary interest rate of say 3%, will give you £6,582.46 at the end. That’s £1,782.46 of interest.
£100 a month for four years results in £5,105.85, including £305.85 of interest. That means you’ve missed out on £1,400 of FREE MONEY. And what did you have instead? £20 extra each month, which doesn’t really buy a lot.
Those are quite small amounts when you’re talking about saving for your retirement, but in reality you could have much longer than 20 years to save and you could save more. You could possibly get a better return than 3%, and if it’s a pension you’re talking about you can get additional benefits – you don’t pay tax on money you put into a pension, and if you’re lucky enough to have a pension fund where your employer also makes a contribution (like I do) when you pay money in, it bumps it up enormously. I think I pay something like 6.5% of my salary every month into my pension, and in return my employer puts in a further 13% on top. That’s LOADS. I also started my pension when I was 25, giving it 40-odd years to build up and mature.
You can see a little graphical illustration of why you should save early on the BBC News website.
I know this is quite a dry piece of advice, but I really do think it’s worth it. I want to be comfortable and live a fun life when I’m old. I don’t want to be poor. And it doesn’t mean giving up all your money when you’re young – it can just mean giving up a little bit of it.
The only real pisser will be if I get hit by a bus when I’m in my late 50s and all this saving ends up being for nothing. But if I DON’T get splatted all over a windscreen, I’ll be laughing.
Piece of advice 2 – Moisturise
I saw someone in their 40s or 50s give this piece of advice in a magazine or on television or I don’t remember where. They looked quite good for their age, and when asked if they had any tips it was this: ‘It doesn’t matter how old you are, start moisturising now. You’ll be grateful for it later. I wish I’d started earlier.’ You can see how this is related to the saving for when you’re old thing – moisturising now when you’re young costs you very little, but you’ll be pleased you did when you’re old.
So please, follow my advice. Save a bit of money and buy some face cream. Then come join me in 2045 and we’ll be loaded and gorgeous together.