20 and i'm going to be a rich man

[jdevlin1985]

Ok here is the plan. I am currently in a 22k a year job (starting salary) which i have worked very hard for. Working in the city of London as a trainee accountant. What i have worked out and can accomplish, with pure dedication towards life, is if i put aside 650 english pounds a month (take note this will leave me with 1250 for myself and monthly outgoings per month) i will have a fortune, without including interest, without including yearly pay rises/bonus etc, of 234 thousand by the time i am 50 (30 years from now). It is estimated also that after i have qualified and fully trained in accountancy, my salary will rise to 25k per year. This will then put in the 2k incoming range per month. If i still stick with the 1250 per month, which here in england is even still above average, i can then start putting aside 850 per month. With this in mind by the age of 50, i could own a fortune of 306 thousand.

This is not, like i said, including pay rises, profits, profit on house, car etc etc. Magical lottery wins , but this is a plan that IS possible.

I have alot of dedication and even 306k can earn you alot lot more money.

What do you guys think? Do you think i can do this?

 

[-SD-]

I hate to break it to you, but 306K converts to ~520K US dollars, which in 30 years isnt going to be worth shit if you discount using NPV methods.

 

[Lao Tzu]

Yeah, it is possible. People try this all the time in voluntary simplicity circles. 1250 pounds sounds very liveable for a single guy in a country like London, assuming the real estate problem is taken care of as that can be a high part of the budget. Paying off a mortgage could be a good idea too as you can spend up to 10% of the house's principal in mortgage payments annually. Personally I hope to never live paycheck to paycheck but some people fall into that trap, and some avoid it. I guess it is up to you to determine what path you take.

In 30 years 306k won't be worth as much as it is in today's dollars though. Inflation is tricky because some goods & services go down in cost and some go up. For example college (in the US) has generlaly increased at about 2x the rate of inflation. At the same time coca cola is only 1.5-2x more expensive than it was 100 years ago (in 1900 it was $0.01 an ounce, now it is about $0.015 an ounce) but wages are 10-20x higher. Another example is the internet, with the internet you can buy some products far cheaper than you could buy them at stores. So in time due to better commerce methods and better production methods prices will go down. It is hard to predict what 360k will be worth in 2036. Since (I assume) the UK will still have universal healthcare, you won't need college and your house will be paid off you should be ok.

So you have to factor in inflation, but generic inflation assumptions don't work. From what I know medical care, real estate & education seem to increase in cost faster than inflation (largely because they are better) while most everything else goes down in cost.

 

[cezza30]

Ok here is the plan. I am currently in a 22k a year job (starting salary) which i have worked very hard for. Working in the city of London as a trainee accountant. What i have worked out and can accomplish, with pure dedication towards life, is if i put aside 650 english pounds a month (take note this will leave me with 1250 for myself and monthly outgoings per month) i will have a fortune, without including interest, without including yearly pay rises/bonus etc, of 234 thousand by the time i am 50 (30 years from now). It is estimated also that after i have qualified and fully trained in accountancy, my salary will rise to 25k per year. This will then put in the 2k incoming range per month. If i still stick with the 1250 per month, which here in england is even still above average, i can then start putting aside 850 per month. With this in mind by the age of 50, i could own a fortune of 306 thousand.

This is not, like i said, including pay rises, profits, profit on house, car etc etc. Magical lottery wins , but this is a plan that IS possible.

I have alot of dedication and even 306k can earn you alot lot more money.

What do you guys think? Do you think i can do this?

Doesn't rent in London cost you loads??

 

[hamstershaver]

once you meet a woman she will bleed every cent out of you

 

[jdevlin1985]

Yeah, it is possible. People try this all the time in voluntary simplicity circles. 1250 pounds sounds very liveable for a single guy in a country like London, assuming the real estate problem is taken care of as that can be a high part of the budget. Paying off a mortgage could be a good idea too as you can spend up to 10% of the house's principal in mortgage payments annually. Personally I hope to never live paycheck to paycheck but some people fall into that trap, and some avoid it. I guess it is up to you to determine what path you take.

In 30 years 306k won't be worth as much as it is in today's dollars though. Inflation is tricky because some goods & services go down in cost and some go up. For example college (in the US) has generlaly increased at about 2x the rate of inflation. At the same time coca cola is only 1.5-2x more expensive than it was 100 years ago (in 1900 it was $0.01 an ounce, now it is about $0.015 an ounce) but wages are 10-20x higher. Another example is the internet, with the internet you can buy some products far cheaper than you could buy them at stores. So in time due to better commerce methods and better production methods prices will go down. It is hard to predict what 360k will be worth in 2036. Since (I assume) the UK will still have universal healthcare, you won't need college and your house will be paid off you should be ok.

So you have to factor in inflation, but generic inflation assumptions don't work. From what I know medical care, real estate & education seem to increase in cost faster than inflation (largely because they are better) while most everything else goes down in cost.

Yes, 306k in 30 years won't be worth as much as it is now, but this will balance with the uk average salary also rising (which it has done over the past 10 years), right?

 

[jdevlin1985]

Doesn't rent in London cost you loads??

I live in Essex, an hour train journey.

 

[musclemom]

Ok here is the plan. I am currently in a 22k a year job (starting salary) which i have worked very hard for. Working in the city of London as a trainee accountant. What i have worked out and can accomplish, with pure dedication towards life, is if i put aside 650 english pounds a month (take note this will leave me with 1250 for myself and monthly outgoings per month) i will have a fortune, without including interest, without including yearly pay rises/bonus etc, of 234 thousand by the time i am 50 (30 years from now). It is estimated also that after i have qualified and fully trained in accountancy, my salary will rise to 25k per year. This will then put in the 2k incoming range per month. If i still stick with the 1250 per month, which here in england is even still above average, i can then start putting aside 850 per month. With this in mind by the age of 50, i could own a fortune of 306 thousand.

This is not, like i said, including pay rises, profits, profit on house, car etc etc. Magical lottery wins , but this is a plan that IS possible.

I have alot of dedication and even 306k can earn you alot lot more money.

What do you guys think? Do you think i can do this?

I cannot commend you enough for having the foresight to begin saving NOW (god knows I've got my own son doing it), tiny piece of budgetary advice, remember a savings plan is a lot like a diet: You need to find a plan that will work over the long haul, because the big picture is what matters most. You cut yourself too short eventually you'll be tapping into your principal.

 

[Lao Tzu]

Yes, 306k in 30 years won't be worth as much as it is now, but this will balance with the uk average salary also rising (which it has done over the past 10 years), right?

Its hard to say because the value of money goes up with time. With Autotrader I can find a good car for less money than I would've had to spend 10 years ago just going to local dealers. Ten years ago I could find a more reliable car for less real money than 40 years ago.

Your salary will go up with inflation, but prices will go down in real terms. But at the same time new technology will come along that you feel you need. For example, if it currently takes you 40 minutes of work to get the money to afford a day's worth of food, in 2036 it'll probably only take 15 minutes a day worth of work. But by then we'll have alot more new stuff. Fifty years ago it was rare to have more than one TV and TVs were black & white 13". Now everyone has multiple color 20-60" TVs. At the same time in 1950 it may've taken 20 hours worth of work at an average salary to afford a 13" black & white TV (that is a guess) and now it is closer to 4 hours.

 

[cezza30]

I live in Essex, an hour train journey.

Ahh fair enough then!

Like someone else said, a woman will bleed you dry that £650 could be my shoe money for the month!