What’s your number?
Do you know what you have each month to save for the longer term? How much can you afford to put away each month to retire in comfort?
Many avoid answering these questions until it’s too late, leading to stress and panic. To retire comfortably, the first step is understanding what you can set aside each month. Here’s how to make sense of your finances and take control.
Managing money can be emotional—spending on desires feels great, while unexpected expenses create stress. To neutralise these swings, create money pots, I call it Lazenby’s Pots because it’s what my father, who was a gardener, used to manage his savings. This method divides your money into specific categories to plan for life’s inevitable expenses.
You will need between 5 to 6 pots to cover most things:
- Car Pot: Covers insurance, tires, servicing, and eventual replacement. Cars incur costs sooner or later, so save proactively to avoid credit card debt.
- Holiday, Christmas, and Birthday Pots: Allocate for annual celebrations and trips, so you’re never caught off guard.
- Clothes Pot: Budget for seasonal clothing purchases.
- Electronics Pot: Save for inevitable appliance breakdowns.
- Fun Pot: Set aside money for guilt-free leisure activities.
Additionally, an Emergency Pot is essential for unforeseen events.
At the start of the month, set up direct debits to fill your pots. Using tools like Monzo or Starling Bank allows you to name each pot and add pictures, fostering accountability. If you’re tempted to buy something, would you dip into your “Holiday” or “Christmas” pot? Naming pots makes you think twice about unnecessary spending.
Once your pots are funded, calculate what’s left for long-term savings. Multiply your monthly savings by the number of months until retirement to estimate your future nest egg. Even if it feels small initially, consistent effort, salary increases, and improved management will grow your savings over time.
By compartmentalising your finances, you reduce stress and gain clarity on your spending. You’re no longer reacting to financial surprises but proactively planning for them.
Now you know your numbers and have a plan for a more secure future. Congratulations, you’re a very rare individual who knows their numbers and on your way to financial independence!
For expert independent financial advice on pensions and investments, contact Leeds based, Lazenby’s Independent Financial Services for a free, no-obligation, get in touch at www.lazenbysfs.co.uk or call 0113 322 0701
Alan Lazenby – Managing Director, Lazenby’s Financial Services
