Small adjustments to our spending habits executed over our working life can have significant impacts on our retirement wealth, regardless of how little we earn.
Take Susan for example who earns $750 per week. She rents an apartment in Perth and pays $400 per week in rent. She spends $200 on food and $150 on bills, transport, and entertainment. This leaves Susan with $0 in savings each month. Assuming Susan’s wage keeps up with inflation, she will retire with only her superannuation to keep her going.
Let’s say Susan changed her spending habits slightly by cutting her grocery spend by only $20 per week. This could simply mean paying attention to weekly discounts, bulk buying or changing to a budget grocery store such as Aldi.
Assuming Susan works for 40 years and places her $20 weekly savings into a savings or investment account paying an average of 5% compounded monthly, Susan will retire with an extra $132,255 dollars. This includes $41,600 in savings and $90,655 in interest.
$20 per week can go a very long way.