How I Save: The 40-year-old business consultant in Croydon with £143,000 saved

I’m going to be straight up with you: This week’s How I Save is a little different to the ones we’ve seen before.

This week’s saver has a lot of money saved. £143,000, to be exact.

He’s in a very well-paid job, he’s older than our average How I Save saver, and he’s not experiencing those relatable struggles of wasting all his money on takeaways.

This is not a man who will provide a magic secret to saving up a load of money, beyond earning a lot of money. That’s important to know. If you’re on £25k, don’t compare your paltry savings to someone earning far, far more than that.

But in our mission to get everyone talking more honestly about their finances, we do have to hear from the wealthy people, too.

While we may not earn the same as he does, perhaps we can learn from some of his thrifty approaches to money.

If not, at least we get to marvel at someone with a lot more money than we have.

So, without further ado, this week for How I Save we’re diving inside the bank account of Ahmed, a 40-year-old business consultant living in Croydon.

How Ahmed saves

I earn £150,000 a year. In my savings account right now I have £143,000.

I also have a £110k investment in VCTs – that is locked in and not withdrawable without loss of tax benefits – I would attribute that to my higher level of business in the last two years.

I’m saving for financial independence.

By financial independence, I mean not having to work because of financial obligations; but choosing to work because I want to contribute to society or keep myself engaged in intellectual activity. This will come about with income from my assets outweighing the spend.

I do have a number of targets – targeting £750k in mine and my wife’s SIPPS by the time I am 70. Targeting £240k in Lifetime ISAs by the time I am 60, to pay for retirement from the age 60-70. Targeting £115k from current VCTs maturity for university fees of my two children by the time I am 50. Targeting £265k by the time I am 60 – for my children.

The main way I save is by putting my investments on autopilot. SIPP contribution and ISA contributions are automatic. I try to maximise the ISA investment every year.

I saved up the £143k mainly through spending far less than I earned over many years. I have maxed mine and my spouse’s ISA allowance since 2015. The saving is a result of our behaviour and buying things for appropriate value.

For example, I could afford private education for children – but I don’t think it is good value, so we don’t do that.

We don’t hesitate to shop from Primark or eat at McDonalds, etc. Paying for a premium brand gives us no joy. We don’t pay for private medical insurance either.

I have had periods of unemployment in my life when, again, we have not hesitated to cut costs to the bare minimum, apply for job seekers allowance, etc. We always strive to keep our costs below our earnings.

The high salary has been a factor in (high) value of the savings, but not on the existence of a saving.

Prior to 2015, I have had jobs paying on average £70k for the last eight years. I am the only fee earner in my house, then and now, although now my wife works on the business and earns a salary and dividends.

I have been contracting since June 2015. My gross business income has been over £100k since then. I ask for a rate rise every year: Over the last four years I have had rate increases of 11%, 13%, 5%, 4%.

I actually enjoy saving and watching my corpus grow – thankfully my spouse is similarly minded albeit just a tad more frivolous than me.

I do follow quite a few personal finance blogs and podcasts – and was first inspired in 2015 by Andrew Craig’s How to Own the World book.

When I was a child I read Rich Dad Poor Dad – and did follow some takeaways, especially buying luxuries last. For example, I bought a house in the UK before I bought a car.

How Ahmed spends

Monthly expenses: £2,800

A week of spending: 

Monday: £2.75 – small cappuccino. I made a mistake. I thought I had a free coffee to redeem thanks to Vitality, so didn’t have coffee at home. But I hadn’t. So I bought a coffee at Cafe Nero.

I planned to have lunch home but my wife decided to venture out, so I went out for lunch, £6.95.

£3.50 for the train journey to London for an office meeting, then £1.50 for the bus from the train station to work. This is the cost of sales, as I am a contractor running a business.

It’s £5.30 to get the train back home.

Tuesday: I spend £6.95 on a Mexican takeaway box for lunch. It was a busy day so I couldn’t get home.

£3.50 for a train to London from work, £5.70 for the train home, plus £3 for two bus journeys to and from station to office.

I spend £63.25 on my share for a team dinner.

Wednesday: £1.50 for a bus home for lunch.

Thursday: I get a free Starbucks coffee thanks to last week’s Vitality activity.

I pay £1.50 to come home for lunch, then walk back to work.

For dinner I get a midweek takeaway for family, £8.50.

After a tiring game of volleyball I pay £2 for an orange with lemonade. It’s our first game this season, so it felt well deserved after burning a lot of calories.

Friday: Redeemed another free coffee from Vitality.

Registered for £45 subscription with a business incubation.

Paid £1.50 for a bus to come home for lunch, but took the bus back within 60 minutes, so the second trip was free.

I do a bulk takeaway order with friends for an evening meal, spending £21.30.

£100 goes to a client entertainment fund required for a team meeting.

Saturday: £13 for one and a half hours of parking at the airport, to pick up relatives arriving from abroad.

The weekly maid fee for Saturday is £18. I would spend more on this to keep the Mrs happy. I add another £18 to cover last week’s missed payment.

£9 for a prescription to treat an insect sting from playing outdoors.

Sunday: 99p for a pay-as-you-go SIM for a visitor, plus £5 for a topup.

I pay £1.25 for seeded brown bread. I had to down select this instead of Seed Sensations because it was £1.70.

Then it’s £1.50 for an hour of parking at a National Trust site, and 50p for tire inflation.

Total spent this week: £350.44

Expert advice

We spoke to the experts over at money tracking app Cleo to find out what we can learn from Ahmed. 

Note: the advice featured is specific to one individual and doesn’t constitute financial advice, especially for a London budget. 

Where you’re going wrong

Usually I’d try and roast your habits, but I think we’ll skip this section. Ok, a quick one: what’s the point of a £150k salary when the only thing I could put in your entertainment category was a £1.50 parking ticket for the National Trust? BOOM.

How to copy Ahmed

I think we all were all hoping for a quicker fix than ‘spending far less than you earn over many years’. In the same way, it’s not going to be possible to only spend 32% of your salary if you scale that down to a starter wage.

Day to day, Ahmed’s actually packing less in takeouts, lunches, coffees and snacks than your average #HowISave diary, and sickeningly less in travel.

It’s oddly comforting that you can have £7,200 spare cash to work with every month and still dither over a 50p price difference in bread. Scrimpy mindset and high salary are the two biggest factors to those six digit savings.

However, there are good habits to scale down and copy.

The first being: ask for a raise each year. Because why the f**k not? Much as we love roasting people on this, cutting back on one coffee a week isn’t going to be the difference between financial ruin or not. Demand better pay and consider moving if you can’t see progression of your skills. Go you.

The second is to figure out if you can really, properly hide money from yourself. Then do it.

The main millennial saving goal, especially in London, is to buy a home. For a lot of people, this is sitting as a blocker in the way of more long-term plans of you chilling with a cocktail at 75.

If saving money for your vague future while you’re living in a cupboard in East London seems like a conflict of priorities, then start small. But get into the habit.

Dictionary section

ISA: Individual Saving Account. Better interest rates than other saving accounts. There’s a max amount of money you can move in. Get penalties for touching. Great for hiding money from yourself.

SIPP: Stash of Pounds, Pennies, and Silver. (No, it’s Self Invested Personal Pension. Again, no touchy)

VCT: Venture Capitalist Trust: Investing in companies that invest in other, high-risk companies. Probably not a good place to put money if you want to touch it any time soon.

How I Save is a weekly series about how people spend and save, out every Thursday. If you’d like to anonymously share how you spend and save – and get some expert advice on how to sort out your finances – get in touch by emailing [email protected].

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