Money Bible

Out there, somewhere on this island we call home, is a person. They're unremarkable in every way. Actually, they are so regular, the only thing that makes them special is the fact they are absolutely, perfectly average.

In the morning, their alarm is set to the average employee's wake-up time. They eat an average breakfast and hop into their Ford Fiesta. They'll drive 21 minutes to work, and crack on for 7 hours and 17 minutes before heading home. On the weekends, they partake in common leisure activities. You get the picture.

Come to think of it, there is one thing that makes this person special. It's a small thing, but it counts for a lot when you think about it. Shortly after their 40th birthday, they made a decision. They decided to pick up this book, read it, and put things they learnt into practice. They decided to not be average anymore.

Today, at 60, they retire – 5 years before the average. They have a net-worth of £1.8m, bagging them a seat in the elusive top ~2% club, quite a bit higher than the national average of £437,685. They can retire with an income comfortably above the £361 per week national average. It sounds crazy, but I've told you exactly how to do it. It's not a secret anymore, you're literally holding Money Bible. But, if it sounds a little crazy, I'll quickly share this person's journey with you.

Disclaimer: I did not take inflation into account, but since I didn't account for it for income or expenses, it all amounts to the same!

At the ripe young age of 40, the average person had the average household income of £32,300, the average household debt of £64,006 (including their mortgage, £12,766 without it), and average expenses of £32,655 per year. They had £6,757 in savings, and their house was worth £285,000. Let's also say they've been contributing an average of 5% towards their pension since they were 22, and their employer has only matched the minimum of 3% (with an average growth rate of 8% per year).

First off, this person used SMART / salary sacrifice to boost their pension contributions without compromising on their take-home pay. They also used the tips in the Earning section to boost their income by about 5% every year (tough, but not unrealistic). Assuming an 8% return on their pension investments, they retire with a nest egg worth £714k.

Their property's value grew by an average of 5% per year, which is slightly below the average house price growth in this country for the past couple of decades. They managed to pay their £51k mortgage off in 15 years (assuming a 3.5% interest rate, repayments were £366 per month). By the time they retired, their property was valued at £756k.

This person turned their attention to their expenses pretty quickly and managed to shave off just 2% per year, every year – which made a big difference over time. They also worked hard to cut back on their bad debts. In-fact, they managed to repay £2,000 of the principal amount each year and became bad-debt-free in 7 years.

This person invested all of their spare income once they cleared that bad debt (what a grafter), and again assuming an 8% return per year, they grew their investment portfolio to £392k by the time they retired.

A pension worth £714k, a property worth £756k, and a diversified investment portfolio worth £392k… a net worth of £1.86m.

There's one other thing that makes this bog-standard person absolutely fascinating. That's that they don't exist yet. What are you going to change in your life to make sure that person will one day exist? How will you make sure that person is you…