We Accidentally Saved More Than £12,000 in 2 years
Time will always pass so the best time to start anything is now.
The Backstory
Two years ago the US-China trade war was really starting to heat up and at the same time, a friend and I were discussing the future in regards to investment plans and cash lump sum goals which we could then use to deploy into interesting opportunities. We discovered that we had overlapping aims, which isn’t surprising given we had set up our first business together while studying A-Levels and worked closely on numerous projects since.
Photo by Morning Brew on Unsplash
The Process
In light of this, we decided to make a commitment to a small monthly savings goal in which we’d have to match each others contribution, something we could automate and forget about. The plan was to only look at the pot once we reached an amount decent enough to put to work. Of course, the tricky part was picking a monthly contribution size that was big enough to be meaningful but also small enough such that we could both honour in the medium term despite all our other financial commitments. We landed on £250 per month, set up a dedicated Monzo pot and held ourselves accountable every month - no lacking! We reached £1,000 in a couple of months and by the summer of the first year we had nearly tripled that amount. Today it has been just over two years and the pot is more than £12,000 which we are quite pleased with given how passive this activity has been, I have not touched the standing order since inception. During this period, there have been interesting opportunities we have been able to participate in which have yielded good returns and most recently we decided to support the BYP equity raise. I’ll write a separate piece on that style of deployments.
Photo by Cytonn Photography on Unsplash
Why?
I think the real question is why not? If we didn’t commit to this two years ago maybe we would have used the money wisely elsewhere or maybe we wouldn’t have. Either way, it doesn’t really matter. What’s important is that we are in a good position for it right now. Reality trumps ifs, buts and maybes every single time.
Lessons
As with any saving or long term investing goal, starting early is of utmost importance. It’s crazy how fast two years flies by, so much happens and the only guarantee is that if God allows, time will pass. Think about it, you only need to put off committing to a monthly action 12 times in one year for it to pass by with zero action.
Saving in a pair or group basis is super useful because there is an added barrier to quitting. Imagine I wanted to pull out of the commitment for some rubbish unjustifiable reason, I’d have to climb the wall of embarrassment while explaining this to my friend and vice versa. No thanks, the only person I’d be negatively affecting is myself. There’s also something powerful about doing this exercise in a group, the accountability and encouragement it affords is priceless and I believe if you are in a position to do so it’s a useful element of growing up and learning to be responsible with money.
Having some cash in hand is pretty useful when it comes to tactically taking advantage of opportunities, because they pop up randomly. How many times has something cool presented itself to you but cash is tied up elsewhere or you just came back from holiday and had to pass up the opportunity? Happens all the time, easy-to-forget-about saving pots are one way to help offset this.
The key is to remember this exercise is in ADDITION to all the other financial activities on your plate but will perhaps be the most passive. We picked an amount we can afford and it doesn’t put us under unnecessary pressure.
Time will always pass so by definition it can never be too late to start.
What Now?
Going forward, we are going to try and expand this savings strategy among a few of our close inner circle. With a broader participation, we should be in line to take advantage of recent stamp duty changes in the property market before the deadline elapses next year. This is interesting because it was not necessarily the aim to skew towards this area but there seems to be opportunity and so here we are. Or perhaps there will be some other opportunities to invest elsewhere. The commitment is still the same and to be honest nothing changes month to month. The difference is that we are leveraging off of each other to become a stronger economic unit and that is powerful - within one year this pot will be three times bigger.
Get Involved
If you would like the spreadsheet I use to track and forecast the savings pot, pick it up for less than a cup of coffee here.
Until next time, peace.
Josh ✌🏾