Is it possible to live on £10000 a year in the UK?
Today, as the title topic suggests, we will be trying to answer that age old question, is it possible to live on £10k a year in the UK?
To be honest, I really would hope that anyone reading this will instantly be screaming “£10,000 per year will buy me a life of luxury that 99% of the Worlds population will never ever get the chance to even think of having! Why oh why, TFS, are you even asking such a ridiculous question and wasting all of our precious blog reading time!?”
However from observations of most of the middle class creatures in this country I fear that most would think that this level of yearly spending would equal a life of poverty and despair, and even worse now people on benefits are starting to moan about their hard done by life – living on a pitance such as the equivalent of a £70,000 before tax per year job. *
So anyway, the short answer is yes, I think it definitely is possible, depending on where you live: Londoners may well be politely denied entry to the 10k club, unless you live in a complete hovel or somehow blag free accommodation. Those outside of the South East should be able to do it relatively easily. I may be generalising but in my experience of living outside of the South East for a few years almost everything was cheaper, not just accommodation but other precious commodities such as fuel, food, and obviously not forgetting beer.
So I guess the next question is am I achieving this level of spending yet? I’m somewhat frustrated to say, the answer is no, but it is something I’m shooting for in my pursuit of FIRE. To illustrate that is possible and how I’m on my way towards that £10,000 target, here is a spiffing spreadsheet of my example budgets. There are four columns:
1. A typical months spending before I was thinking about retiring early
2. A typical months spending since I “saw the light” and have been trying to cut back.**
3. An optimal months spending to hit £10k
4. An example post-FIRE budget
There are a few interesting points to note here:
- In terms of mandatory outgoings, I was running a pretty tight ship in the first place (some more extreme frugalists may disagree with that though!), so the majority of spending is on going out and entertainment, which you can roughly translate to getting pissed in my case. Yes, I like a good night on the tiles as much as the next man, but with FIRE as an imminent goal, this HAS to be the category that can be most easily cut down on. And so it will be. There are some other cuts in other areas as well which I will talk about in further posts, most of them fairly small but if you add them up it comes to a nice chunk saved. So far I’ve already cut out £231 per month, or £2,772 per year of regular outgoings, not including any of the bottom section of social and other spending, with more to come once I sort out the Gas and Electricity bills. So you can see there is almost always going to be scope for everyone to cut costs, with very little or no sacrifices in those areas.
- To hit my target of £10K I’ve cut back slightly on the Gas/Electric bills which should be easy to do, and I’m also down to a pretty measley £80 a month on food (although I think this is still doable whilst eating well and healthy – we’ll see how that goes!). But the main two cuts are on my two social activites of “Going out” and golf. I figure £40 a month should buy me two rounds at semi decent courses which is not too much more than I play now anyway. £100 a month on going out and social stuff will be tough but there is a lot of mileage in just inviting friends over instead and doing things that way. Where I might fall down here is when social obligations play a factor, for example someone wants a night out in London for their Birthday. Again… we’ll see how that goes!
- Next up is the “After FI” column, and I note the fact that many report that their spending actually decreases once they retire from the workplace anyway. This is due to combination of having more time to spend on productive endeavours that can save you more money (e.g. growing vegetables, insourcing more home repair, car maintenance, etc.) and I think the tendency to spend less as you get older anyway. In five years time I will, quite obviously, be older, so I am guessing I won’t have the desire to be down the pub quite so often, and will have substantially more Stag do’s, weddings, and other expensive social obligations to manage.
- The final thing I will note is that once I am truly at FI, I shouldn’t have a mortgage to pay for, I realise this will require more savings, or you can count it as an investment if you want, but ultimately, that is the goal. So with the accommodation puzzle solved, we can glide in under the 10k barrier with consummate ease. Until that point, I need to cut out some more stuff to hit the mark.
I think the key thing to take away from this for any readers thinking about starting down this path, is that I was probably living on a much tighter budget than most of my peers in the first place, and I still had plenty of room to manoeuvre down the spending ladder… again I will stress with literally no downgrade in lifestyle. In a way this seems unbelievable, but with a few careful purchasing considerations, some slight financial engineering, and a fresh perspective it is easily achievable. Don’t fret, some cold hard facts on how you might achieve this yourself are coming up in future posts.***
At this point it is probably wise to ask yourself a few important questions:
Do you really need a 3 or 4 bedroom house, with huge garden?
Do you really need a brand spanking new or nearly new car every 3-4 years?
Do you really need to eat out at expensive restaurants or get some fat and sugar laden takeaway 2 or 3 times a week?
Do you really need all of those new designer clothes, handbags and shoes? The ones that are made in the same factories as the ones that cost about a fiver?
If so are all of those things listed above more important to you than having the time to live your life in the way you really want to, not in the way the system has brought you up, to work (unnecessarily) for 40 years?
If the answer to any of the above is yes, and you are happy working to pay for them till you are 65 or maybe even 70 or beyond the way things in this country are going, then this blog is not for you my friend, and I hereby give you permission to stop reading right now and go and buy the latest shiney shiney thing on Amazon ((Yes that was an affiliate link… well I may as well try to make a few quid out of any consumer mugs that happen upon the blog 😉 ))
If the answer is a firm and unresounding NO then please join me, sign up to the RSS feed, via email, or twitter ((I’m refusing to open a facebook account for now!)), as we journey through the murkey depths of personal economic, environmental, and ethical values in the UK waters and emerge smelling of an all natural, organically grown English Rose.
p.s. I would love to hear if anyone thinks £10k is far too big (or small!) to live on in the comments section, and if anyone is smashing below that barrier, let us know any tips and tricks on how you are doing this?!
*Yes, I realise that Daily Fail articles are mainly written to get a rise out of people, but in my experience there are many people like this in the real World, albeit slightly less annoyingly selfish and stupid. Back ↑
**Please note I am cohabiting with my future wife so this obviously helps with splitting the mortgage and other bills etc. However if you are single then I would heartily recommend house sharing with 3 or 4 other people, this generally works out even cheaper than sharing with a spouse or partner, and is usually a flipping good laugh to boot! Back ↑
- Creating a budget / tracking your spending
- Cutting your food shopping bill in half
- Financial engineering part 1, with Cashback credit cards
- Financial engineering part 2, Bank accounts that pay and reducing monthly bills
- Starting up your investment accounts
For some readers this may be treading over old ground, but I feel they are necessary to providing a solid grounding to the principals of the blog, and will hopefully provide a resource for any future new readers that are new to the subjects at hand. Back ↑