Savings and Compound Interest (Not a Poker Post)

I've been very foolish over the years when it comes to money. The number of pointless things that I've wasted it on is just unbelievable. This is just a short post encouraging anyone who reads not to make the same mistakes that I did.

Since I left school at 18 I've spent most of my time getting into debt and then repaying it; a cycle that I'm only just breaking.

Before I go any further, I'd like to draw your attention to a mathematics article that explains the value of saving and compound interest:

have-we-caught-your-interest

My girlfriend and I have begun to discuss mortgages. The problem is we have jack shit in savings so we are going to have to wait until such time that we can afford a deposit. If I hadn't been such a pleb when I was younger and had put up say, £1000 a year for the last ten then using the equation from the article I'd have about £12.5k (assuming I had invested wisely enough to get 4% interest on average), nearly enough to pay for a mortgage deposit. If I'd put up £2000 per year I'd now have £25k, more than enough.

And just to demonstrate how much my hapless spending may have cost me, consider the following two scenarios. 

1/ I started saving £2000 a year when I was 20, and managed to get 4% annual interest; and I continued until I retired at 70 (assuming retirement ages have risen by that stage). I'd have £317,547.53.

Note that only £100k of that is savings, the rest is compound interest!

2/ I started saving at 33 years old and put up £2000 a year and managed to get 4% annual interest; and I continued until I retired at 70. I'd have £169,940.67. About half of what I could have saved. 

These are very reasonable assumptions. I have probably cost myself a six figure sum in interest earnings through pure foolishness!

If you are in your early twenties, I encourage you not to fall into the same pitfalls of spending that I did and to try and invest for your future. If you are older like me, then we must make the best use of the time we have left. I estimate that I can still just about double my savings through compound interest in the remainder of my working life (providing interest rates climb again in the near future), and I'm going to strive hard to make sure I don't return to my old ways. Good luck!