How do you know if you're on track financially?

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0:50Hello, everyone. Hope you're well. We're into the new year now. And what we thought would be good in this episode is just to cover a few questions that we've been getting about people's finances. Tamayne, do you want to hit us with the first one? Let's go. How do you know if you're on track with your finances? I don't personally, and I really struggle with this, but what we've got is a load of stats. Let's pull out some of the stats and have a chat about them, about averages and stuff. I want to talk about, you know, what the figures are, but also maybe some of the flaws in the figures and the data and also how maybe just because people have got a certain amount in a certain way doesn't mean that you should aim for that.

1:27I think the first one's great for this. so the mean average amount of money held in uk savings accounts is 17 365 pounds across all age groups uh younger to older blah blah blah okay so mean first of all the issue with the mean average is it it's impacted by people with a lot yeah so you know if you've got 10 people and everyone's got one pound and then one person's got a million it's gonna bring the The mean average will be a lot higher, even though the most people have got one pound. So the mean figure, first of all, take it into consideration that people with lots of cash in savings accounts are going to boost that figure.

2:09And then secondly, for me, £17 ,000 in cash is quite a lot of money, isn't it? It's a lot. It's a lot of money. I see the savings account as an emergency fund. Yeah. Not like, yeah. I would rather find 17 grand in my emergency fund. I'd invest most of it. An emergency night out in Vegas, just in case that comes up. like do you know what i mean what are you saving for it's a lot um see i'd have a lot less in there and then put it in investments but you know emergency fund is very important yeah i think um i'd be interested to see what the median figures look like there i actually know them because i've been looking at them recently and i know that for people in the like 30 to 34 category the median amount in financial assets like this was under 500 pounds so again like the mean warps it a lot.

2:56Imagine like Bakayo Saka and Phil Foden, how much cash have they got in their bank accounts? They've probably got millions just sat in cash and they're just dragging that figure up. What you've said there is like key as well. Someone could be walking around going, I've got£100 ,000 in cash in a bank account. You could be putting£500 a month into a stocks and shares ISA. Over the long run, you'll lap them because they're not risk on. They're not investing that money when they should be. so having you know oh i should be aiming for 20 grand in cash in my bank account i would challenge that and say are these people using that money correctly or not yeah i mean they might just have they might have insane amounts of money and for them that's an emergency fund if you're spending six grand a month six to ten grand a month that might be an emergency fund and that's you know people get to that kind of level so that's you know okay next one up to a third 34 percent of adults have either no savings or less than a thousand pounds in a savings account so there we go makes you feel better you hit you with that shit sandwich everybody does have 17 grand's feeling a lot better right now at least i got something yeah yeah like take take a lineup of adults and what i'm one in three of them have got i've got no savings at all which is what you always say about like people are one paycheck or two paychecks away from being homeless yeah from yeah yeah well that's it that's it so i i mean i think um i'm probably saying the stats before they come up but six percent of adults have a stocks and shares isa so if you if you've got a stocks and shares isa with more than a quid in it you're like in the top 10 percent yeah six percent i hear a lot of people talk about cash like a lot of my friends are oh yeah i've got my cash and i'm like you should look at the stocks and shares isa but most people have a like more people have a cash i said in the stocks and shares right yeah well we interview people sometimes who are experts in their field and then we talk about investing in stocks and shares isa's and they're I don't really understand that, but I'm an inequality expert or something.

4:52So I think there's a lot of people out there who are hyper-intelligent or capable of having that sort of asset who just don't do it for whatever reason and prioritise cash. Most people have a cash ISA. Most don't have a stocks and shares ISA. If you're listening to this and you go away or this year you've set up a stocks and shares ISA and you've put a couple of quid in it, you're in a rare breed of person in the UK. And I think you should pat yourself on the back for that. do you know what i mean and if you're not it's not you can do it now yeah 61 of uk adults save money either every or most months okay so six in ten of uk adults save money every month okay that's impressive 61 yeah do you save money every month i invest money every month i don't know if that counts is that kind of saving money when i get my paycheck i do investment straight away and then i'd live off the rest i think you've on something important there.

5:47Saving and investing, you could probably say they're different things. Yeah. So saving would be towards short-term goals or even medium-term goals, wedding, buy a house. Car. Yeah. Investing is like much longer term. Yeah. I think the two, if we separated the two and separated the activities that they kind of pay for, maybe people would understand it more. Because I think some people probably think, well, I save some money into premium bonds every month, so that'll do. do i read the next one almost two-thirds 65 percent of people believe that they wouldn't be able to last three months without borrowing money wow oh no i think it's like i just gotta gotta guess gotta spend on that credit card now i think it means if they had no income for three months they would have to borrow money yeah this is what you were saying about two months away from bankruptcy isn't it i mean you know like remove remove someone's main income and how long is it until they need to borrow to pay the bills.

6:42That's the emergency fund point, isn't it? So if your finances are in a good position, you could obviously survive a lot longer. If you're in a better position, you can survive a lot longer without borrowing money or without a paycheck. Yeah, whether that's still... I think the key thing here is, right, people think of an emergency fund and they think of emergencies, funny enough, but actually think of it as like a freedom or flexibility fund. So if you're in your current job and you don't like it or you get sacked or you get made redundant without pay or whatever, if you've not got an emergency fund, you have to get a job.

7:14And that limits your ability to find a good job massively because you're basically like, whoever offers me a job first, I'm taking it. Because you have that horrible thing of you start and then you're going to wait six weeks before you get paid and you're already thinking, oh my God, do you know what I mean? Whereas if you have three months worth of living costs, you've got that ability to choose. And I bet there's some credible data that people who take a bit of time will get a better job outcome. And long term, that's going to have a massive impact on your wealth because instead of settling for 25k a year you held out and you got 45 you know and you something that you like for a better company and all of these things so emergency fund is like people are like what's the worst that's going to happen my tire's going to pop but more of like an fu fund or a flexibility fund i think is a better way to frame yeah fu fu fund so like if your boss is giving you a hard time you're like i don't need this crap or if like you want to start your own business you can be like like dame i screw this job i'm gonna go start my own business i might not make money for six months but i'm okay for those six months exactly i've got an emergency fund or savings it allows you more choice and flexibility in your life it allows you to kind of dictate where you go and i think it's that's why it's so important um and when an emergency does hit it protects your investments because you don't need to sell them yeah that's really important yeah so it's actually an invest it's like an investment in your investments before what it's broken i had emergencies i was like oh crap i've got to i've sold many investments to like pay for like short-term emergencies and i'm like and then you watch them going up you're like oh i've lost money exactly because i had to sell it so yeah and it's just kind of you know as my nan would say um it's like what is it is it murphy's law what it's not murphy's law what's the law everything that could possibly go wrong will go wrong yeah i think that's murphy's law i don't know if it is that's probably the one about computers doing really well isn't it it's some guy sometime said any shit that could happen will happen and basically it's always when you don't want it to happen so your tyre pops the moment you lose your job you know it comes in threes they always compound yeah I told you I told you it was Murphy's door god this guy what's the one about computers then and the power doubles every more's law more's law more okay men have more savings on average than women across every age group.

9:28That's definitely true in my household. Let's keep it that way. That's what you're trying to say. No, it's not. That's how I like it. No, I think, okay, so how long did your partner take off work with your child? She hasn't gone back yet. I don't know if she's going back. Exactly. Almost two years, yeah. What kind of savings is she doing at the minute? She's saving your ass from doing any work around her. house um she's not really saving now because she's not working but this is but she's got the savings from before yeah but like that's why right i think that's probably why i think early age so 20s men typically engage in money topics more you know men gamble more men like anything to do with money men are men are more in that world and then by the time that women realize oh okay i need some kind of self-agency here they might have a baby and they might step out of the workforce and that that that then means that they're not saving through that period and you know i don't think it's like malicious or bad i think it's a situation like your situation where it's like we're together i'm earning the money you're running the home very traditional kind of mindset i'm saving because i've got the cash but then and i'm going to look after my partner and my baby but then what happens if you split up and it's like well that's my money this is this is how you get those issues that come about the the sensible thing to do would be maybe to make an allocation for her to save still because from a tax planning perspective in retirement it makes sense to have two pots of 500 000 pounds more than it does with one for a million because you know from you can share the tax burdens and things so one thing we did we both opened license together and i just put in for both because then you get you get like the full bonus yeah so i pay into both of our licenses and then uh both of our sips as well yeah so yeah yeah i'm planning to i want some of that money as well when we retire so yeah i've got to make sure she's got a good pension i got a good pension so yeah yeah i mean obviously there's you know if you're a higher rate taxpayer the tax break that you get on contributing into your pension might be more beneficial than paying into hers when she's not earning money and stuff.

11:45So you've got to consider these things. But I do think from a, if you're committed to your partner and you think long-term we're going to be together, it makes sense to at least balance it a bit. So it's not too one-sided. But I think we can hear stats like that and think, oh, the world is sexist. And maybe there's an element of that. But I also think it's like, it comes about from the very natural process of women have kids and women then tend to be the primary caregivers. um yeah i think we just need more conversations about that and i think people just need to understand that actually it can be beneficial for you to top up your partner's pensions or whatever my my mate at the minute um well recently he made a bit of money in crypto but the crypto was in his partner's name because she wasn't working so the capital gains tax allowances and stuff so like these little conversations that's a good idea yeah have you got another one for me uh yeah something from the fca those guys know what they're talking about sometimes 39 of adults in the uk were not coping financially or finding difficult to cope or had no disposable income 39 percent we're talking about cost of living not coping financially or finding it difficult to cope or had no i mean i can fully believe that I think, you know, when I first graduated, I graduated on a job on 15K a year living in Manchester.

13:11And I was living with my mate in a flat, in a two bed flat. That flat is 2 ,500 quid a month to rent now. Do you know what I mean? Like, how the hell, like, so I would be needing, just to rent the place, I need like, you know, three times what I was earning or double what I was earning back then. And the wages haven't done that. The wages have not done that. Like maybe if I got that same job now, I might be on 25 grand. Still can't afford that flat because of every other cost. So just that alone tells me that it's gone way out of whack since the financial crisis because we're talking 2010 when I graduated.

13:46And I think what's happened is the cost of everything's gone up loads and wages have kind of stagnated. And then what we've done is tax bands have been frozen as well. So there's that fiscal drag component of more people have crossed over into higher tax bands and they're just being taxed at a higher rate than they probably should be because your tax bands haven't risen with inflation like they should have. So everything's become twice the cost. You're not getting paid twice as much. So now - Rent's going up crazy. So, you know, 80K is getting you what 40K got in the past, you know, kind of vibes.

14:18And like, we talk about the inflation period of the last two to three years, but I think a lot of people remember 10 years ago and remember this ability to go on holiday and it not cost you five grand. It doesn't even feel like 10 years ago. It feels a lot more recent than 10 years. Yeah, I don't know. So we've got some figures here from Unbiased that say how much you should have saved by each age. So this should be interesting. So by the age of 30, you should have£51 ,434, or the equivalent of your annual income, one-time salary. I'm guessing this is in pension and stuff as well. That seems high to me.

14:54Did you have£51 ,000 at the age of 30? No. I had£51 ,000 of debt at the age of 30. no to be fair from like student loans and things like that once you're taking pension and stuff like that yes I probably did at 30? yeah yeah you would get your pension sorted at 30? yeah auto-enrollment and stuff and I've been working a lot I'm not like you you never sit past yeah you're shorter yeah you're not shorter this guy you don't never get past the trial period do you? no they invented the trial period for you extend that and then get rid but anyway no I had yeah I had i probably had around that maybe maybe more i'd also been saving into stocks and shares and things like this um i don't know i don't remember that but i really hate these things of like you need one times your income you should have yeah that's in what where where in cash in a bank account because that's no good to you or is it within pensions and risk on assets again like people who discover these figures by the age of 30 or 40 or 50 they're so depressing but what I actually think is the majority of people in the UK are not engaged with their finances in any meaningful way no matter what age you are if you discover the power of compounding and the power of investing and you engage and you go for it you're going to outrun everyone so don't worry about all this crap let's read the rest anyway because we need the content the average savings the average savings age by 40 the average savings by 40 should be£124 ,911 see to me that makes a bit more sense because in your 20s you're like you might be having fun you might be in uni you might be you know doing a few jobs that you're not planning to stay in long term but if you've got between the age of 30 and 40 to go from 51 000 saved to 124 000 saved i'm pretty sure more most people earn more in their 30s than they do in their 20s so it seems like a more attainable target but maybe that's just because i'm mid-30s so for me that's what i'm looking at yeah by 50 198 grand by 60 270 so the the the interesting conversation here is are are they saying that a 30 year old by 60 needs 270 grand because i'm saying that's not enough i'm saying like if you want to retire what i think this actually is is a 60 year old today should have 270 because they're going to get 270 with their pension which will get them three six nine twelve grand a year they got a partner 12 grand a year they both get two state pensions that's another 24 grand so they're on about 48 grand's worth of income as a household that's a medium style plsa that was some quick maths my mind is reeling but it sounded like it made sense yeah no no don't check it what what i mean is that i think into it's i think 270 grand a day for us this is why i don't like these figures at all they're just not you know you're saying to a 30 year old you need 270 grand by 60 i don't think that that's going to be enough an inflation adjusted and the the things that 60 year olds today have going for them or have going against them are completely different for the 30 year olds because that 60 year old might have a paid off house where or they might have a generous pension they might have a bad pension but what they certainly got is a generous state pension and that that's doing a lot of the heavy lifting in terms of, you know, 12 grand a year of income, roughly, just, you know, approximate figures.

18:13So 270 grand by 60 might be enough, like I say. It won't be fast. Because they might get 10, 11 grand a year from the 270. The partner has similar. And, you know, what if they're single? I don't know. I think these are as useful as a chocolate light bulb or whatever the saying is. Last time we recorded, Tomei, and you were having some real dramas, with your accountant. So how's that been going, mate? They're sacked. So drama sorted. They're a big corporate firm. They didn't really reply to my emails very quickly, like took a week or two at times. And they charged me way too much. I mean, I've got pretty simple taxes and yeah, they were charging me thousands.

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20:00They will say that I am always nagging them and that essentially I just have I have beef with compliance I love the team compliance slows down all my deals because every time I get to the finish line they've got to check documents KYC GDPR and it's just a nightmare it slows the deal down by like two three weeks it's always on both sides as well as yeah sometimes it can be blocked on the other side exactly well that's where today's sponsor can help indeed Vanta helps companies of all sizes get secure and compliant fast and they stay that way they do it by automating compliance with over 35 security and privacy frameworks like SOC 2 ISO 27001 and HIPAA yeah all of them and this saves businesses so much time and money according to a recent IDC study Vanta customers save over half a million dollars a year in costs not bad and they also help you complete security questionnaires up to five times faster which is great because everybody hates filling out forms if you're a business that needs to prove security and compliance, visit vanta.com forward slash making money to sign up for a completely free demo today.

21:01That's vanta.com forward slash making money. There's a link in the description though, so you can just click that. All right, let's help them out with something simple and like tangible, a checklist. Okay. Yeah. So we've got one here. Got an emergency fund. Yeah. Have you got an emergency fund? Budget, whatever works for you. Oh, I'm guessing what they mean there is like do a budget whatever style works for you um spreadsheet i think keep it simple yeah people have these next level budgets where they input one cell and it like it's like chat gpt and stuff it's crunches numbers exponentially growing and doing things yeah just uh do what we did look at your bank account and then set up a budget yeah look what you spend on and then in column out column that's it yeah so i shared mine and i got all this hate

21:52your budget is so shit i'm like it works though it's two columns where's your finance channel dickhead i mean my budget is shit my budget is healthy mate what are you talking about it's like because it didn't do all this old singing old dancing someone was like you should use pastel colors because they're more pleasing on the eyes i'm there with a harsh yellow harsh yellow and garish red no but i think like people really like the fancy budgets and i just think keep it really simple for me i literally have an in column like this is my income out column here's all my expenses expenses sigma it at the bottom so i get a total and i go that minus that equals that.

22:37And as long as that figure's zero or above, I'm lit. You know? Yeah. Keep it simple. How's your budget?

22:47Oh, dear. The next one on the checklist is... I remember his name. I'm going for him. I'm coming for him. He's on my board, mate. That board ain't simple. It's complicated. Okay, get out of bad debt. how much coffee have you had today fourth cup of coffee just going yeah get out of bad debt yeah bad debt what about the good debt yeah i mean but there's plenty of good debt and even the bad debt can be good debt so a credit card can be a great thing if you're if you can handle it but i think you need to have a real honest conversation with yourself you're probably one of these people that can't handle a bit i don't have a credit card i'm not That's what I mean.

23:27I'm the same. I'm the same. I just don't have it. I'm the same. I like the idea of going, oh, I'm just going to get the Amex. I'm going to do this. I'm going to get the points. I just end up spending five grand on crap. It's like giving my two-year-old fireworks. You just can't give me a credit card. It's just going to be chaos. So have that conversation with yourself. Because I think most people don't. And they think, oh, I'm not adulting until I'm getting the points on my Amex. You know, that works for the people who are really good at paying it off in full every month and all of this kind of stuff i just came to a point in my life i was like i'm just going to use debit cards i can't be bothered with the credit cards the benefits aren't that good the one thing i will say that i use them for is if i'm going to buy a big purchase so for my home studio spent say like 12 grand on equipment put it all on an interest-free credit card and then every month just had a direct debit going so that i paid it off within the period it's almost like an interest free loan yeah why wouldn't i take that but i'm not one of these people that like rinses everything on the credit card no like coupons and yeah all of that stuff um some people some people are that way inclined so first of all identify are you bad with debt and then that dictates what is the bad debt i would certainly say anything that you're paying an interest above six percent on you might want to be like okay i should probably look at getting rid of this um i put the only thing i would maybe say not is a car car finance is the car finance is kind of like home finance in the sense of if you want a car of a certain level you might you're probably going to get a loan on it i mean there's a whole conversation about whether you should just get a banger and drive around in that but i get that certain people like it's important to them to have a german whip um so you're looking at me yeah yeah um um and then yeah just hammer it down they got the snowball and the avalanche method so it's kind of like the stupid names for um i'm so angry today it's all the coffee i'm telling you yeah and that guy rinsing my budget um there's this the uh this they are silly names for like two very simple things one of them i can never remember which but one is like you take the debt with the highest interest rate you pay that off first and then once you've paid that off you you pay the others off you maintain minimum payments across all the others the other is you take the smallest debt as in the number clear that first because it's motivating to get rid of the little piddly ones.

26:09The best thing to do is pay the highest interest rate first. Makes sense. Because see it as the gain you make is whatever the interest rate is. Not paying it off. Yeah, if something is charging you 30 % a year, by paying that off early, you're saving that amount of money. Exactly. So yeah, get rid of bad debt. I mean, get an emergency fund, budget, whatever you can, get out of bad debt. I personally probably wouldn't be doing it in that order. I would be saying do a budget first of all otherwise how you're going to know what money you've got identify areas of your spending where you're probably overspending and cut those back and get rid of crap that you don't need you don't need Disney and Netflix like just pick one those kind of things can make a big difference at this level I don't you're not going to get rich off it but when we're talking about sorting your life out completely leaning out 11 pound here 10 pound there you suddenly got an extra 100 pound a month and that can be that that's that's the the debt payment.

27:03So just for this period of time, cut back. You know, I went to the bone at this period. I was, I used to on the first of every month go to walk to Manchester, which was about four mile round trip, buy like six kilos of mince from the butcher, carry it home, dripping back. It's like meat sauce dripping out. And I'd make enough bolognese to last me a whole month. Like if you bulk cook bolognese 30 at a time, the price per unit goes so low mate so low and i i and then you know i would just boil a bit of pasta every night and get a block of frozen bolognese out of freeze and eat that every night my mate would be like you're eating bolognese again for three years i'm still here yeah anyway do the budget first of all and cut out the the unnecessary stuff and then i think personally with the whole i was like you gotta have an emergency fund before you invest and pay the debt.

27:59I think that's boring. And I think all you're doing then is you're desperate to get to the goal of investing and saving. So go, I'm maintaining all the payments to my debt. And I'm building up an emergency fund. Because otherwise, what will happen is an emergency will happen. And then you just have to spend on the debt again. And then start a bit of investing, go, let's just put five quid a month into it. Just so you've got some skin in the game. and you can kind of feel like you're progressing. Because even though when you clear off your debt, you are progressing, it's this horrible feeling of like pushing to zero.

28:34You're like below zero. And then you finally get up to zero. You're like, wow, all of that work. Two years and I'm at zero. Whereas you could have actually gone, well, at least I've, you know, when all your mates are like, oh, I benefited from the stock market going up. You're like, yes, I did. You know, and I think do a little bit of everything, a bit of moderation. for me that that whole you need the emergency fund thing first is quite restrictive so is the bad debt thing sort your pension again don't agree with the order i think the pension should be right up there at the top i think even if you're in the worst kind of payday loan debt ever you should be paying into your employer work scheme because you're going to get old one day and the tax benefits are so high that that money's taken you won't even really notice it's gone life insurance i mean there's an argument there with the life insurance that you would do that early as well because you can't afford it so pay the debt first but you know if you die you die debt dies with you so i mean pay devil's echo someone who hasn't had his pension sorted from 30 like you it's a lot of information to give people like you're like well you've got to do emergency fund you've got to do like your debt you've got to do your your insurance i mean life insurance is to i did it towards that i haven't done it yet towards the end of my like getting my finances in order yeah that's everything else and then that's the last thing on my list yeah i'm going to redo the checklist i'm just going to say you you should be looking at your pension straight away at work and doing a budget start there and like you know understand that by doing your pension at least you're in at least you're in you're investing you're in that scheme then once you've done your budget you know how much you've got spare each month allocate that towards paying off bad debt assuming that you know my debt was so bad that every bit of money i had had to go to it if you're not in that position and you're clearing it off and there's a little bit of money that you can break away for investing do it because i just understand the human element of i was just so desperate to start investing that i just wanted to do it and i think people we we kind of say to people you have to do this first then you have to do that then you have to i don't know if i agree with that we have actually got a newsletter series where we go through each step put that in more detail so rather than listening to me angrily shout at the microphone because i've had too many coffees um that's more detailed and we'll leave that below as well where we go through it step by step we've got a question here from a specific person gizmo 10777 go and read it out to you my wife and i have been saving for our futures for a few years now we invest around 1 000 per month into stocks and shares isa plus our workplace pensions which are maxed out with our employer matches saving feels like another bill now i'm finding myself feeling more stressed about our finances than ever despite on paper being in the best position i've ever been in when will i start to feel more comfortable or is the stress something i'll just have to live with until i retire this is a good one for you damo probably better asking you mate you're like Mr.

31:34Laissez-faire, I don't care. I don't get stressed though. That's what I mean. Yeah, but he's saying he feels more stressed now than he ever has. Yeah, yeah. So, you know, there's that whole thing of people without money worry about getting it, people with money worried about keeping it. And I'm kind of of that position as well. Like, you know, I've got plenty of assets now and I'm always wondering like, oh, is that the right place to put it? What if there's this? What if there's that? Even though I know, you know, the kind of, the logic behind it. what i would say is um one thousand pound a month is amazing yeah has gizmo asked himself herself am i saving too much am i do do you know i mean have they worked out like i need this amount in retirement or i want that amount um and actually i'm probably going to hit that anyway maybe that's a way to look at it to set a goal figure at the end and to say because if you're just blindly saving you never find the bottom of that um and you just keep firing more and more money away i say a way to get less stressed is to look back at where you are like five ten years ago and be like i prayed for times like this as meek mill would say i used to pray for like i like when i look back i'm like oh i remember wait a minute hold on wait a minute you thought i was finished yeah i prayed for times like this to shine like this so like yeah you look back and you're like oh i remember like five years ago i really hope i get this job or i really i wish i could afford like some ethereum or i wish i could afford this new car and then you look for five years you've got the new car but you're like oh i want this like you always look forward but you don't actually look at how far you've come so he said he's been investing for a few years and now he's in the best financial position he's ever been in so like if you went back four years would you take this right now would you be like i'm happy i wish i was there i would take this so you should be less stressed and look back that's what i do because i'm like two years ago my finances were in a state so like Like, yeah, I look at the journey, not, I mean, I'm sitting next to you.

33:29I'm like, I want to be, I want to be, get all the stuff Devo's got. But I'm like, no, it's your own journey. You've got to look at where you came from and where you are now and see like the growth. That ladies and gentlemen was down to a T. A new segment we're having on the make. Yeah, and you can follow me on Instagram for more wisdom at T is making money. Yeah, there we go. There we go. Yeah, no, I think that's great advice, mate. And I think like you say, if you look back at where you come from and where you are now, the logical assumption is that you're going to continue to do that. you're going to continue to grow.

33:55And in another five years, you'll look back and go, wow. Yeah, and I think that's really important that we do that. I would encourage Gizmo as well to just really ask yourself the question, am I doing enough or am I doing too much? Because that would set your mind at ease. So for me, I know if I save at the current rate that I'm saving at until the age of 40, four or five years' time, four years' time. I was like, stop trying to make yourself younger, mate. I'll expose you right now. I could probably stop saving and let the money just compound when I retire and be okay. I wouldn't be like lavish retirement, but that to me then is like, should I at least, maybe I dial it back a bit.

34:41Maybe in my 40s and 50s, I don't save as much and I live a bit. And I think in order to have that conversation with yourself, you need to know the number. I just think it's human nature to always find problems in everything you do. And to always think, oh, I'm not doing enough or whatever. I hope that helps Gizmo. But, you know, we're probably in a similar position. Not T. T's chilling, man. T didn't even know there was a problem until he started on here. Honestly, I didn't. I was like, what? I need to sort out life insurance? I need to sort out all this stuff? So, yeah, it's good to be aware.

35:15So we've got another question here. How do you work out how much you need to save for retirement? There's something called the Trinity Study. and a Trinity study said that at retirement you can withdraw around four percent of a portfolio's value every year and you know that it should get you to the end of retirement there's a lot of if buts maybes on that um but if we just use that as a rule of thumb that would mean if you had a million pounds as a pension pot you could draw about 40 grand a year off it and it should last you for about a retirement some people will say that actually it should be three percent or five 5%, you know, if you say 3%, you'd be more cautious.

35:50If you say 5%, you're being a little bit more aggressive. So what we can do then is we can go, okay, how much money do I need to live today? And I think the reason we do it off the figure we do today is because people underestimate how much they might spend in retirement. What I would say though, is if your aim is to buy a house, trip out the housing costs, you're not going to be paying a mortgage, but you are, you're not going to be traveling to work, but you're on a seven day weekend. You're going to want to do stuff with your life i would i would hope um you take that monthly figure you times it by 12 and then you times that by 25 to get the four percent rule so that that 25 figure the big figure that you'll get it will be big is the pot that you need to be able to draw four percent a year from it relatively sustainably the problem with that number is it doesn't give you an inflation adjusted number this is where it gets really terrifying because you know what we're saying is that in 30 years time that million pounds won't be a million pounds anymore it's going to be you know it won't buy you as much say so you take that big figure and then you run it through an inflation calculator and maybe you assume that inflation is three percent and you know that in 30 years then that that figure is going to be a couple million few million maybe and what you would then do is you would back work from that and say, okay, how much do I need to save a month to hit that figure?

37:18The thing you want to, again, so it gets convoluted at this point because of the inflation piece. Don't forget that your wages and your savings rate is likely to increase with inflation as well. So while everything decreases in value, so money decreases in purchasing power, wages go up and stuff as well. So, you know, the average salary today, 30 years ago, It looks huge. But there's people that were saving 30 years ago for their retirements today and they're doing okay. Everything lifts up through that process of inflation over time. I would say start with the 25 rule. Sorry, the 4 % rule, which is times by 25.

37:57George Agan had a different rule. What was George Agan's? We've got that written down. 3.75. So he said, yeah. So the 3.75 rule, you take your monthly expenditure and then you times it by 375 and that will give you your big number, the amount of money that you need. And importantly, the reason it's 375 is because it allows for 20 % tax as well of you to still end up with the amount that you need to live off based on today's current expenditure. So do both figures and look at them and depress yourself. And it's also how long you're going to be retired. George Agan says 30 years. So like, obviously we're living longer.

38:33So your retirement might not be 25 years. It might be 30, might be longer, hopefully. Yeah, I don't think you can answer this question in your 30s. I don't think you know enough about what's going to happen down the line to seriously answer it in the same way as the plans I had for my life in my 20s have not materialised in any way, shape or form. My life is completely different to how I'd expect it. And I suspect that if I try and look another 15 years out, it's going to be the same, right? So I don't think you need to know the answer. I think what you probably just need to do is have your eye on the goal and save as much as you can, but still live your life at the same time and approach it that way.

39:11If you're tucking away 10 to 15 % of your total gross income through employer match and other forms of saving in your 30s, I think you're going to probably be all right. Because once you get to 40, 50, you'll dial that up because you're like, I'm earning more money. The kids have left. I've paid off the mortgage. So we're going to slam all that into pension. If you're younger, saving anything above the auto enrollment is going to put you probably in a good place yeah we all crave that number don't we we crave that how much who knows who knows ai might just you know cure death we live forever and then you keep pushing this you really believe ai is going to keep you around forever yeah just compounding your pension for like ever that's that's what i do that's what i do like i was talking to someone past she's like why do you want to live forever I was like, think of the compounding.

40:01Think of the returns. What if it's 700 year compound calculator? I'm going to be a quintillionaire. Richest man on the planet. He's been compounding. He started with a pound in 1988. And now it's like, you know. Multi, multi-billionaire. Yeah. Yeah. Quadradecadillionaire. What should I look for in a pension fund?