A frugal Zombie?

Mr Zombie   November 16, 2014   1 Comment on A frugal Zombie?
In my oh so distant first post I mentioned the fact that I had read a few personal finance blogs and wasn’t engaged if they were 100% frugality focused. Something about reusing tea bags.

Initially my focus was on where money was going to be invested. What super cool assets would monies be rammed into. I’m not the most frugal guy, and this point has been hammered home by the blogs I’ve been reading.  A little but of frugality, it seems, goes a long way.  Investing for the long term and cutting back on spending are two sides of the same gold coin.
My spending 
My monthly allocation of my wage goes a little something like this.

  • Workplace pension is taken directly out before I am paid, including the employers contribution it comes to 20% of my gross take home.  It’s a fair wedge but I’m used to it and don’t miss the cash. 

  • Another 10% of the after tax goes into a company share option scheme.

  • 50% is siphoned away into a multitude of joint cash savings and current account for bills and other bits.  

  • 20% I put into another current account, my favourite current account. This is all mine and I allow myself to spooge it guilt free.

  • The remainder goes on ‘volatility’. I don’t really have any specific savings for MOTs, insurance or whatever other surprise expenses there are. So I use this extra and my.own current account to top it up when needed. It’s not the most efficient way, but it works for me.  Sometime I will be a couple of quid into my overdraft, but never much.

It could be better
Looking at my spending I could definitely cut it down. Less coffees and flapjacks perhaps. But I really like my flapjacks mmmmm.
I think part of it is focusing on the absolute amount. £2.60 for a coffee and flapjack by itself doesn’t look much.  One a day at work is still only £13 for the week, again it’s not a mind blowing amount.   This is approximately £52 for the month, which for some reason seems a lot to me.  And then about £624 a year, assuming I’m a workaholic and don’t take a day off.  Which doesn’t seem much.  What goes on in somebodies brain to make £52 a month seem a lot, but £624 a year not much.
Perhaps you could argue that the coffee and flapjack are what get me to work and without it I would wallow about in bed all day every day, unable to function.  Extreme?  Perhaps.

All together now
But, lets say I was to go cold turkey tomorrow and put that daily £2.60, or annual £624, into investments.  Now for some assumptions 🙂
– The £624 is invested in full at the end of each year
– There are no dealing fees or tax
– The cost of the coffee and flap jack combo rises at 3% a year
– Investments return 5% year on year
If I was to do this for 30 years it would total £68,324… which is staggering.  An extra £68k in savings from only an extra £2.60 a week going towards Financial Independence.  It almost seems too easy.

Time to cut back?
I’m sure we all could cut back on our spending.  But we also all have to live as well.  Like I said, I enjoy my daily coffee.  It’s a wee treat part way through the day.
But just doing this quick exercise has highlighted how even a relatively small frugality gesture is going to pay dividends, literally, in the future.
So the plan is to cut back spending by £50 a month going forwards.  And to not think of this as a reduction in my spending each month, but an additional wedge going into my financial nugget. 
I need to be careful as I know I can get obsessive with things and it should be a balancing act.  We don’t want to become someone who does nothing or skips his or her round to save a little bit of cash.  But on the other hand just being a little bit more careful will have a big impact on the size of my financial nugget.

Any tips on how to stop focusing just on asset allocation and investing?  How to focus a bit more on the, potentially tougher, act of frugality.

Mr Z

One thought on “A frugal Zombie?

  1. M

    Your £68k example is quite motivational for me!

    Perhaps you could give yourself a motivational slap round the face by making a collection of post it notes, and sticking them on appropriate places round the house?

    "Spend £2.60 vs. Receive £68,000"


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