It seems that an American journalist has caused a bit of a Twitter storm for publicising the following advice:
According to Jean Chatzky, a financial journalist, by the time you are 30 you should have at least the equivalent of your annual income saved for retirement. By 40 it should be three times your annual income; by 50, six times; by 60, eight times and by retirement 10 times. How do you do that? You save 15% of your income every year (most of it into the stock market) from the age of 25 onwards.
I can’t say I saw anything out of the ordinary in what was stated, but then I do read stuff about FIRE so perhaps I need to admit that I’m not part of the mainstream when it comes to finances.
Circulating stuff on Twitter is one sure fire way of hitting a young audience. Or, perhaps more accurately, I should state that by doing so you’ll miss an older demographic who are still slavishly watching the BBC or Sky News and reading the papers. So, as the tweet picked up steam on line, the youth reacted in utter horror at the seeming impossibility of saving a penny, never mind 15% of their income.
I have to admit that I don’t remember saving much in my teenage years or my twenties when it seemed there was so much stuff to buy and so little cash to buy it with: hifi separates on which to play my budding album collection, driving lessons in the hope that I could borrow my dad’s car (an old Fiat 126, the only car in the family), beer, Chinese takeaways, clothes from Burton’s menswear and so on. There weren’t iphones and laptops and ridiculously priced coffees, but we had our temptations.
What there was though, in the Eighties, was a growing sense of the importance of money and the desire to get some and make it work for you. Other people seemed to be doing it, which was why they were driving around London in Porches while sporting blue striped shirts with red braces. It also seemed that certain tradesmen were beginning to do quite well for themselves and that we needed to Tell Sid about the British Gas shares that were coming to market. In the Thatcher years I do think we became much more money orientated, but it was with a sense that there was a positive edge to it. You could get some and you could use it to get some more.
I turned 30 in 1993 and had just married, and that’s when I remember thinking about trying to save and invest for the future. I doubt I was thinking about retirement at the that point but, having pretty much spent everything I earnt up until then, I wanted some sort of financial cushion to support my family going forward. I’d realised how pernicious debt could be with credit cards that just never were cleared and I resolved to pay them down – once I did, the money I’d been spending to do that would be “put to work” in buying investments and shares.
Sometimes, however, I do wish I had had access to the information in the 1990’s that I have now. What if I’d been reading Early Retirement Extreme and Mr Money Moustache when I turned 30 instead of 50? What if I’d had access to the information about UK investing that I’ve found on Monevator and been applying it for twenty years? What if I’d had the forums on Money Saving Expert at my fingertips to give me further advice on tax, pensions, ISA’s, ETF’s and the rest as I required it?
So, on the one hand, I sympathise with the youth of today looking at the financial mountain they have to climb, but I also kind of think that it was always thus. The young will never have any money, they never do. But, what they do have on a scale way beyond anything I had, is access to information and knowledge that will help them when they decide the time is right. “When the student is ready, a teacher will appear”, is a saying that’s always appealed to me because it often seems to be true. The teacher appears when you seek them out and, given the internet, the ability to find that guru, or gurus, has increased exponentially since the days when Norman Tebbit told us to get on our bikes.