Jasmine Birtles
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A Riesling to Save! Turn two glasses of wine per week into more than £4,000 in four years
Moneymagpie Team
1st Nov 2023
A Riesling to Save! Turn two glasses of wine per week into more than £4,000 in four years.
Money expert, Alexandra Loydon, at SJP Wealth Management has four tips for World Savings Day
A Riesling to save!
The 31st of October marks World Savings Day, raising awareness of the importance of saving money and encouraging financial responsibility, reminding everyone that setting aside even a small sum of money can make a difference over the long term. Research shows that one in four UK adults have less than £100 set aside in savings, leaving them vulnerable to unexpected bills – and the rising cost of living
The cost-of-living crisis is impacting the whole country. None of us can escape the news around the highest rates of inflation the UK has seen since the early 1980s, nor the fact that bills are increasing, the price of fuel and food is rising, and that salaries are stagnating. Research from SJP’s recent financial wellbeing index shows that a third of us (30%) are either ‘struggling’ or ‘really struggling’ with our finances, and that almost half of us (42%) are mitigating this stress by making cutbacks on our spending.
The Office for National Statistics (ONS) has reported that the rising price of food is what ‘most’ adults feel is biting into their budgets, with nearly half of adults surveyed cutting back on their grocery bills to help manage the crisis. Another route that UK adults are taking to help navigate the increased cost of living, is by cutting their pension contributions, with research by You Invest showing that 15% of 18–34-year-olds and 21% of those aged 35–54 back on their pension contributions, stating the cost-of-living crisis as the reason.
Alex Loydon, Director of Engagement and Consultancy, St. James’s Place says:
“While the challenges of the day-to-day mean it’s tempting to give less consideration to our future-selves by reducing the amounts we’re putting into our savings, investments, and pensions; we do need to think about the long-term impact, making such cutbacks, will have. Not only will pausing our pension contributions potentially impact our retirement plans, but we are also hurting ourselves along the way, because most contributions are matched by our employer and benefit from tax relief, so we are turning down free money that will benefit us later in life. A more beneficial way to improve both our overall wellbeing and our financial wellbeing is to switch what we might spend on going out in a week and investing that instead. And I’ll show you how £20/week could get you to over £4,000 in 4 years – now that’s a Riesling to save!”
A Riesling to save! Use World Savings Day to turn two glasses of wine per week into over £4,000 in 4 years – with this helpful four step formula:
- Don’t pause the pension: Cut a ‘vice’ instead (start saving £20 per week)
Good financial planning begins with awareness, so look at your bank statements or have a think about your spending habits and be honest with yourself about what you might benefit from cutting out of your weekly ‘vices.’ With more of us back in the office again, like me, you might have fallen into the habit of a post work social a couple of times a week. And while a good work/life balance and some socialising is great, you might consider switching what you’d spend on a couple of drinks one evening socialising – or stay on the soft drinks instead – so that you can put that money towards your financial future.
If you know you’re partial to a couple of glasses of wine on an evening out, why not challenge yourself to set aside what you’d spend on two glasses, which is likely around £20 (if you’re in London) and save that money instead – better for your health and your wealth!
- Cutting your ‘vice’ over a year makes a grand bit of difference! (Your £20 per week is £1000 in a year)
£20 per week might not feel that impactful towards your future financial wellbeing, but like all habits – the good and bad – these add up and compound over time – for the better and the worse! Cutting a vice out of your budget just once is a start, but if you keep this good habit up over a year, that £20 becomes £1000 – and one that you might not feel you’ve worked too hard to save up! Save for even longer and the benefit of compounding starts to kick in – here’s how
- Keep this up for 4 years and let interest kick in!
Now that you know that you can not only almost effortlessly save up £1000 over a year – and all while benefitting your overall health, wellbeing, and diet – it will likely feel even easier to keep this habit up for four years. Especially when you consider that over four years £1000 could turn into nearly £4,500 thanks to a standard 3% interest rate, and who doesn’t love free money, especially while times are hard like they are now
- Your vice gets nicer when you invest it in an ISA…
When you start to save for the long term, this saving becomes an investment as it starts to grow thanks to the benefit of compounding. The longer you leave it the more growth you benefit from. To avoid having to pay tax on any of that growth, investing in an equity Individual Savings Account i.e.. a stocks and share ISA, enables you to grow and access your savings, free of tax. Assuming growth of 4% per annum, cutting x2 glasses of wine per week could see you save £10,000 in 8 years and £45,000 in 25 years – especially if you go for a stocks and shares ISA!
Whatever your ‘vice’ and no matter how you are feeling about your current or future financial situation, hopefully just looking at this four-part formula makes you feel a little more confident about your capability to make cutbacks to your cost of living, which won’t just benefit you now (both in terms of your health and your wealth) but will set yourself up for a more resilient financial future as well.
With almost half of us feeling stressed about our finances and the cost-of-living crisis, it’s understandable why we might consider investments in our pensions as an unnecessary expense, particularly as we don’t tend to make the best and most thought-out decisions when our mental health isn’t at its most resilient. But it’s never been more important to consider your future financial wellbeing, particularly when inflation is so high, because this is what you need to beat over time.
You may not be close to retirement age or know exactly what you want your retirement to look like, but hopefully this gives you more confidence in understanding how investing in your future, despite the current challenges, might be more achievable than you think.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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