The Daily Telegraph told the story of Prudence and Extravaganza, sisters with the same earnings but different behaviour. Prudence saved £100 per month from the age of 18 to 38 while Extravaganza saved nothing. Then Prudence stopped saving while Extravaganza saved £100 per month for 27 years. Though Extravaganza had saved £32,400 compared with Prudence’s £24,000, when they reached age 65 Prudence had £146,000 in her retirement pot while Extravaganza had just £68,000.
The fact that early savings pay off so handsomely is the reason everyone should try and save while they are young, whether those savings are in the form of a pension account or a tax-free ISA.