In our How I Manage My Money series we aim to find out how people in the UK are spending, saving and investing money to meet their costs and achieve their goals.
This week we speak to John, 54, who lives in Buckinghamshire with his wife and their son. John already has an array of savings, pensions and investments and is on a mission to find even more ways to make his money work harder for him. He is looking for a property to buy and has no desire to be paying off a mortgage in retirement.
Monthly budget
My monthly income: I do marketing work for an AI tech start-up. I also do separate marketing consultancy work. My income fluctuates but is around £15,000 to £20,000 per month. Consultancy work comprises about 25 per cent, while 75 per cent of my income comes from the start-up job. We also have income coming in from a rental property in the US, before mortgage and other costs.
My monthly outgoings: Rent in the UK, £2,500; US mortgage, £2,000. Other UK outgoings: Council tax, £200; groceries, £600; gas and electric, £150; water, £50; broadband, £30; mobile phones, £60; subscriptions like Prime Video and Netflix, £100; eating out, £400; clothes, £100, but these figures vary.
I’ve recently added more money into our Self-Invested Personal Pension for the year. Our home insurance is £120 a year and we pay £900 for car insurance annually. We have an electric car which is cheap to run. We spend about £10,000 a year on holidays.
I grew up in the US and met my wife in San Francisco. We decided to move to the UK in 2010 because we wanted to travel more. A major software firm I used to work at helped with the relocation.
I was laid off a year-and-a-half ago, but it turned out to be a blessing. I got a year’s salary on top of my normal annual pay, as well as stock options. It also gave me the opportunity to start my own consulting practice, which has created another source of income and allows me to offset some costs through a home office and other business expenses.
I take a disciplined approach to my finances and already use ISAs, pensions, stocks and savings accounts. Now I am looking for additional ways to make my money work harder for me, particularly as I edge closer to retirement. We have no debt, which I think is one of the keys to long-term wealth. I purchased a used car outright recently and we always pay our credit cards off in full at the end of the month.
I’m constantly discovering new ways to handle my money and find lower risk, tax-efficient products appealing. I want to get more value from the cash I already have. To complement my existing savings and investments portfolio, I started using an app called Stoa a few months ago. It turns savings deposits into free subscriptions and other perks [instead of offering interest].
I’ve put £15,000 into Stoa so far and like the fact I get immediate, practical benefits rather than just having my cash sitting in a savings account waiting for interest.
Having a diversified portfolio of investments and savings is crucial. I have invested in the stock market for years as it’s something I’ve always been interested in. For example, one stock we invested in was Google 15 years ago, which has generated a return of more than 2,700 per cent for us.
Our stocks and shares ISA has a six-figure balance, and I also keep a meaningful amount in cash savings, both in the UK and the US.
I’m starting to burnout from working in the IT industry, so I am talking to financial advisers about when I can retire. My goal is to retire within the next 10 years. Having scrutinised my finances, I think that is realistic if we continue saving, investing and eventually use proceeds from investments and property sales to ensure our mortgage is fully paid off before retirement.
Saving money in pensions has always been a priority for me. I have several hundred thousand pounds in pensions in the UK. As a couple, we also have substantial retirement assets, brokerage accounts and cash savings in the US. We have built up enough that I feel increasingly confident we can retire comfortably if we continue to be disciplined. There is no way we could survive solely off the UK state pension.
The cost of living has forced us to be more careful with our spending, and I track all the money going in and out of our accounts. I use AI tools such as ChatGPT to help track down the best deals and support my financial planning. ChatGPT helped me select an electric car and I’m also using it to help think through life insurance.
We recently moved out of London and are currently renting a three-bedroom house while looking for a home we want to buy. We own and rent out a property in San Francisco, which we plan to sell to help buy a property in the UK. We’d like a four-bedroom house in this area, likely in the £800,000 to £1m range. I want the mortgage on the house we buy to be fully paid off within the next decade and by the time we retire.
Sometimes I ask myself whether we really need all these savings. My motivation, however, is my family and I want my wife and son to have the best lifestyle while living within our means. I save so we can enjoy great experiences and holidays and can continue to do so well into retirement.
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