The £63,700 lunch

The National Employee Savings Trust (NEST) came up with some surprising figures reported in most of the newspapers.

Substituting a packed lunch for a bought lunch would enable a 20-year-old to accumulate an extra £63,700 in his pension fund by the time he retired. Even cutting out a pint of beer and a coffee each week and adding that money to the fund would rack up an extra £26,600.

People are often surprised by how the ‘compounding effect’ of growth over a long period like 40 years can turn small monthly savings into large capital sums. It’s relatively easy to turn this to your advantage – just sign up to save slightly more each month than you think you can afford. Within a few months your other spending will have shrunk almost without your noticing to keep you in the black. If you don’t believe this, take it as a challenge!