One of the largest costs for a lot of people is commuting to work. For example, in London a typical tube journey costs £1.70 each way and assuming an individual works for 227 days per year (i.e. not on bank holidays and with 25 days holiday), that equates to a total spend of £771.80 during the year, without even adding on overground trains or buses.

Clearly, for many people it’s not possible to walk, run or cycle to and from work each day. But for some people it’s  possible to do so, or at least to reduce the cost of the journey somewhat by doing part of it on foot or by bike.

In addition to saving money on commuting, keeping fit is another area where costs can be cut by a large degree. The average gym membership at a council run gym apparently costs around £31 per month, which over the course of a year would cost an individual £372. While going for a walk, run or playing a free sport may not be as comfortable as life on a treadmill in an air conditioned gym, it could help you save that £372 that could go towards making an extra £672,573 in the long run.


The third step to making this vast sum of money is to use cashback credit cards. They pay you each time you use them and require no extra effort apart from in applying for them. Assuming a 1.25% cashback rate and a £500 monthly spend, over the course of a year it’s possible to generate cashback of £75 to be added to the savings pile for the long term.

Furthermore, even something as simple as taking part in Dry January (where no alcoholic beverages are consumed in the month of January) could save you £60. That’s because the ONS estimates that the average weekly spend on alcohol in the UK is £15 per week. Certainly, it may be difficult for many people to even contemplate quitting alcohol for a whole month, but if it helps you to retire early, pay off the mortgage or fund a better lifestyle, then it may be worth doing.

Totalling the savings from the above four steps gives a figure of £1279 per annum. When this is invested in the FTSE 100 during a 45-year working life (i.e. from age 21 to 66) and assuming a 9% total return per annum, it generates a figure of £672,573. While a 9% annual return may sound high, it is the annualised total return of the FTSE 100 from its inception in 1984 to the present day. Therefore, there’s the potential to generate even better returns in future.

Certainly, the above five steps may be difficult to do year-in, year-out over a long period of time. But they show that by making small adjustments to an individual’s lifestyle and backing the stock market over a long period of time, it’s possible to generate an exceptionally large sum of money.

Of course, finding stocks that are worth adding to your portfolio for the long term is a tough task, which is why the analysts at The Motley Fool have written a free and without obligation guide called 10 Steps To Making A Million In The Market.

It's a simple and straightforward guide that could make a real difference to your portfolio returns. As such, 2016 could prove to be an even better year than you had thought possible.

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