GBP18000 a year is divided by 12, GBP1500 per month.
Wow! Seems a lot. But look further!!
Income Tax: GBP210
NI: GBP 100
Council Tax: GBP 100
Utility Bills: GBP50
Petrol: GBP 150
Mortgage: GBP300
I have GBP590 left for the month. How do I survive?
Groceries: GBP 200
With GBP 390 left. What about my life? My entertainment? My dining treat? My spa? My haircut? My gym subscription?
That needs about GBP 200 I assume. Means, I left GBP190 a month left. To make it further, I say GBP200.
In a year, I only save GBP 2400. No wonder, ISA (High interest account) offers me more than 4% interest rate for tax free GBP 3600. This is because I can never save more than that in a year. Smart!
By the time I spent 10 years in the workforce, probably my pay increases. My tax increases again but I probably get to save GBP50 more a month.
Assuming I get a pay rise every two years. Savings increases GBP50 a month every two years, when will I be rich?
Answer is NEVER.
See the calculation:
First two years - GBP 4800
Then two years - GBP 6000
Then two years - GBP 7200
Then two years - GBP8400
Final two years - GBP 9600
Total: GBP 36000
This is the total if I don't spend any single pence from my savings. I cannot even afford a house in cash. The best I can get is a SPORTS CAR with DECREASING MARKET VALUE.
I need to make it super huge to become a millionaire. To cut it short, I can never become a millionaire. Forget the dreams of becoming the next Sir Alan Sugar. It is just not happening if you are average in life.
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