I have made no secret here on The Frugal Cottage that we are saving for early retirement. Which means we are saving for a long time! We are also saving quite a high number. A number that equates our freedom. Something that will take years of dedication to achieve. That’s our number.


I have talked about our number before. Each year I aim to save a certain amount so that we can be on track.


What is your number?


Now, this can be your number for anything. You want to go on holiday? Work out how much it costs and that’s your number. Want a new car? Work out how much you can afford and that’s your number. Want to retire early? Work out how much you will need and that’s your number.


But, it can often seem quite overwhelming when you work it out. I know for me, that if I sit and think about it too much, that number becomes impossible. Unachievable. But, once you know the number, you can break it down.


This one system can ensure you meet your savings goal, every time.


Take our early retirement goal. If we succeed, we will retire 17 years earlier that we are supposed to. We need to bridge the gap between retiring early and when other pensions start. 17 years is a long time! The minimum will need to save and/or invest for that is £306,000. Yikes! Just that number alone would make most people run for the hills. It seems so unachievable, doesn’t it?


But, then we break it down. We have 20 years to achieve our goal. £306,000 divided by 20 (the time we have to do this by) equals £15,300. Not quite so scary, but still quite a lot.


So, we can break it down even further. £15,300 divided by 12 equals £1,275.00. That doesn’t seem quite so bad! Almost doable.


You can then go even further and see what you would need to save each day to ensure you meet your aim. So, if we use the number £15,300 and divide it by 365, it shows that we would need to save £41.91 a day every day to meet it. But, we already have £13,500 (ish) saved so take that away from £306,000. That leaves us with £292,500 left to save. Divide that by 20 (years) and we get £14,625 a year we need to save. Finally, divide that by 365 and that gives the figure of £40.06 to save every single day.


That gives a target for you to meet. Whether you want to look at it yearly, monthly, or daily, is up to you. I quite like the idea of each day I need to transfer/save £40.06 to make it work. Seems a lot less daunting than saying we need to save £14,625 a year.


You can then take it that step further. Can you earn an extra £XX a day to ensure you definitely meet your savings goal? What about selling things you no longer need around the house? Start a blog and start earning money from that? Taking on freelance work?


Creating extra income streams will only supercharge your savings, so long as you actually save the extra. But that “I need to earn and/or save £40.06 today, what can I do to make sure I do it?” is incredibly motivating!


What is your number? What can you do today to save that? 


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