A Little Bit Richer

This series is brought to you by L&G, helping you build a future that's A Little Bit Richer.

Iona Bain: Hello and welcome back to A Little Bit Richer with me, Iona Bain. This podcast is brought to you by Legal & General and it's all about giving you the information that you need to feel more financially confident. Now, if I asked you how much money you would need to feel financially free, what would your answer be? Most people would draw a blank on that one, I reckon. Today we're going to be asking, how can the actions that we take right now help us to close that gap between where we are at the moment and our financially free number? If you're wondering what that is, you are not alone. I think we all want to have a stronger financial future, but we don't always know what we should be doing to get there.

Well, fret know more because today I am joined by Sammie Ellard-King, known across social media as Up the Gains. He's been helping Brits get financially fit with his podcast, The Money Gains, and his recently launched Gains App. Sammie has built up an impressive following by spreading financial literacy, teaching people that financial freedom is possible and helping them realize what their financially free number is. Sammie, welcome to the podcast.

Sammie Ellard-King: Thank you so much for having me

Iona Bain: So you're a big advocate for financial freedom.

Sammie Ellard-King: Yes.

Iona Bain: I wonder if we can start off with a wee test.

Sammie Ellard-King: Okay.

Iona Bain: Can you talk about why financial freedom matters and why it's a goal that we should all aim for in less than 30 seconds?

Sammie Ellard-King: Okay.

Iona Bain: Are you ready?

Sammie Ellard-King: Yeah.

Iona Bain: Go.

Sammie Ellard-King: So financial freedom, keyword in that title for me is the freedom aspect of it because as we grow our money, what it does is it gives us choice. It gives us the ability to make our own decisions that aren't perhaps laid into by a boss or how society wants us to think. Money is the tool to allow us to get to that. And so financial freedom is a goal worth working towards because it can allow you to become the person that you want to be and it's about your values and how you want to get towards them, I think.

Iona Bain: Yeah. Nice. So can you talk about what a financially free number is, what you can do to work it out and then how you can come up with a plan to achieve that number?

Sammie Ellard-King: I have a really simple exercise which people can do and what it means is essentially you're going to go away, a bit of pen and paper. I would get yourself somewhere quiet and what you're trying to do is write down what's really important to you. So I say five things that you would want if you had the dream life that you wanted. And I'm not talking dream life as in Lamborghinis here or penthouse on a Palm Beach or whatever. If you want those things, great and write them down. But largely we don't. When we really ask ourselves if we were to remove all barriers, what do we want and what's actually physically achievable as well? And then you go away and you actually go and research, how much do these things cost? How much does it cost for me to have the things that are really important to me? I want two dogs and I want a nice 1980s Volvo because I'm obsessed with it because my dad had it growing up.

Whatever those things are, you're writing these down and that would fill up your cup. You'll see that some things are materialistic and then how much money would I be okay on living on? Write that down say per month and then add that up for the year. You're trying to essentially then create yourself a list of items with a number of like, oh, okay, that costs me half a million quid to live that life that I want to live. So now you've got a number that you can work towards and that can change. This is what's really important about this. What I thought five years ago is not the same today. So I think doing this exercise all of the time once a year, am I still in the same position or have I added a little bit more to that or have I taken anything away?

It is actually quite eye-opening. For one, the amount that you need. Most people that we do this with, it's a lot less than the big number that I thought they needed. And I just think it's a really powerful thing because now you've got something down, now you know what you're working towards and now you can start putting in the steps of like, okay, how am I going to get there? First, I'm going to get my house in order. Then I'm going to start figuring out my emergency fund and then I'm going to start looking at my investments, my pension, how can I move things around to get myself to this big goal of dream life that I've said that I wanted?

Iona Bain: And tell me a bit about your own personal journey and why you've become so interested in this concept of financial freedom.

Sammie Ellard-King: I was deep in debt in my mid 20s. So I went to university at 18, they gave me a credit card and an overdraft and I was peacocking at every single turn. I was out in every party and buying every jacket, everything I can get my hands on basically. I didn't know the value of a pound. It wasn't really installed into me in my household as a young lad. And so once I got let loose, I just went nuts. I knew I'd have to pay it back, but I was just like, that's a big later problem. But it got me into the spiral of like that behaviour's okay. And I built up £24,000 of debt by 25 and I then had a moment on a beach in Vietnam and a friend of mine basically said to me, " When do you want to retire?"

We call him the chairman in our WhatsApp group, so he's a sensible one. I said, "Oh, 50 would be nice."

And then he said to me, "When do you want to pass away?"

I said, "80".

And he said, "Oh, how much are you spending a year?" And let's just say for argument's sake, £30,000. He's like, " Well, that's £900,000. Have you got that?"

And I hadn't told anybody about my debt and so I poured out to him about it. I trusted him in that moment. I then came back because of that sort of flick switch and started reading about money and really getting into it and I became absolutely obsessed. And so I realised very quickly that the behaviour that I was going on was negative compounding and I wanted to be walking towards positive compounding. And I realised that actually even with really small amounts of contributions, it doesn't take a lot of money to build a substantial wealth part, which can change your life at the end of it. My sister, for example, started with £50 a month investing and has paid for deposits on a house and things like that. So these things are possible for the average person and I just didn't feel like there was anyone talking about that message.

Iona Bain: Your friend did you a massive favour that day.

Sammie Ellard-King: He definitely did. Changed my life forever.

Iona Bain: And was it daunting to go from that position of being so heavily in debt to then being able to imagine a day when you could retire and have that lifestyle that you wanted?

Sammie Ellard-King: Yeah, I think initially it was just like figuring out what on earth I was going to do. With me, I kind of had this growth mindset of like once I started to try and get myself out of debt, I worked out my salary was going to take me seven years to get out and I wasn't okay with that. So I started putting in side hustles and working on different things. I started little businesses outside of my nine to five and I started bringing in extra streams of income and I paid it off in 18 months. And once I got back to that zero point, I was like, well, now I've got a choice to make where I can either kick on and grow these parts from all these multiple streams of income or I could go backwards and become the old me.

Iona Bain: Did you feel that you could have gone back to your old self or not? Or were you so much in this new mindset that that was no longer a possibility really?

Sammie Ellard-King: Oh, I know. I haven't changed a little bit at all. I'm still an emotional spender and I impulse buy just like the rest of us. And what I have to do is I have to put little things in place to stop me from being that. Systemising things is massively important to me. I put little rules in place as well. I have the 24 hour rule for impulse purchasing. It just stops my little brain of being like, " I want the thing."

I don't think you change, but I think you just grow up and become wiser and these things really help me control my spending so I can move towards the things which are more important to me because I think that's really important. You have to ask yourself the value piece. Everything in life is a trade off. Every single social post we put up we're like, " Just live life now and forget about future you."

And I'm like, "Yeah, well, what about if you do get there? You can do things in balance."

And I think that's the question. You can have the shiny thing, but it does affect us over here. And if you're okay with that question, then that's the right decision in the moment. And so I think you just have to ask yourself that every time you're purchasing. And it does help me because I know what I'm like.

Iona Bain: And it sounds like you've got a lot of habits now in place that are helping you override some of those instincts and some of that part of your personality that naturally wants to enjoy yourself. So can you talk me through what those weekly and monthly habits are, and who could possibly benefit from that if they're watching and listening and maybe they're in debt or they're not yet saving and investing?

Sammie Ellard-King: Yeah, absolutely. People find budgeting really difficult because it's looking past you. Next month's going to be completely different. You've got Linda's 47th birthday coming up, you've got X, Y, and Z in the diary that you forgot about and it blows out the budget because you were looking at past you trying to budget, which is just impossible to do. And so that's why a lot of people don't budget even though they know that they should. So the three bank system proactively looks at your spending. So you basically have one bank you get paid into, the second bank is for your bills and subscriptions, your third is your savings account. The bonus bank, number four is your savings and investments pop or your self- invested personal pension. You send the money out to your savings and investments first, pay yourself first. You are more important than your bills. Your bills are still important. Pay your bills, please.

Iona Bain: Of course.

Sammie Ellard-King: And then essentially what's left in bank number one is it. And let's just say for argument's sake, it's £800. Now you can budget that £800 rather than budgeting the full amount. And it's a lot easier to do because you're like, " Okay, I've got 200 quid a week to now last me for the rest of the month. My savings are taken care of, my bills are taken care of." And you'll see that the big overarching theme of that is just automation and not leaving anything to chance. So your goals are covered, your paying the man is covered and then, " Okay, I've got this left."

And I have, I call it the anti- budget within that as well. I like to have some fun money, like 200 quid, 100 quid, whatever that is, even 20 quid and I am blowing it and I do not feel guilty about it. It's important to have that aside, you need to be able to enjoy yourself and I totally respect a lot of people are hand to mouth and so that's harder for them, but there are some things you can do. Yeah, we mentioned about impulse spending. 81% of people that purchase something on impulse buys regrets it the next day. So just putting that step back of the 24 hours in place is a massive, massive win.

Iona Bain: Absolutely. It sounds like you went on this journey really educating yourself about this whole subject, having not known much about it previously. How much time should someone spend on learning about all this stuff? I mean, obviously listening to this helps.

Sammie Ellard-King: I think a lot of people start learning about personal funds. They get totally overwhelmed. Just take a second and learn one tiny little piece, like what does interest mean in a savings account today? And that's it. And that's all I'm going to learn this week. And then next week I'm going to take on an extra problem. There was a study done by another brand who I shall not name on this podcast, but it shows that if you spend 30 minutes a week learning about money, you end up with two times the net worth over time. So it's quite a significant jump and that's all you need to do. And I always say this, I'm like, the 10% you actually need to know is really simple. The 90% is your mindset and working on yourself is probably the biggest step you'll ever make financially in your entire life because you can know all the facts and still make unbelievably terrible financial decisions.

Iona Bain: Yeah, absolutely. You are so right to say that the basics are actually pretty basic and that it's common sense but actually putting it into practice is really hard if you don't have that awareness about yourself, your life, your environment, how you behave. And so that's where the hard work comes in. And can we just dig into financial freedom as a concept as well and what that means to you and what that might mean to other people, just to give them an idea of what they could aspire to?

Sammie Ellard-King: I want to buy myself time to do the things that I want to do more than the things that I don't want to do. I think if you want to put it as literal as that, that is what it means. When people are like, "Oh, what does that mean?"

Well, ask yourself. Sit down and write it out. For me, I want to farm in the middle of Kent with some land and I want to grow stuff all day. And I want to drive around on my little quad bike and I just want to do stuff, and then I want to have like a big marquee at the back and throw the occasional wedding, and I want to do this little concept which is like farm to the wedding plate and it's like those kind of like off gridy type cool weddings and that's what I want to do.

Iona Bain: That sounds amazing.

Sammie Ellard-King: Yeah. Well, to me it does. The other person might be like, " You're a nutcase. I couldn't think of anything worse," right?

 But what's that thing for you? And so I went away and started looking at, " Okay, how much does that actually cost for me to do all of that?" And it was a lot less than I thought. And so I was like, " Okay, cool." In my head, I was like, " That's 10 million quid easy." And it just really wasn't. And so I think it was a really nice exercise for me because then I was like, " Oh, okay. Well, I actually don't need to work as hard as I thought I was going to have to."

 And it can take the pressure off a little bit. And in five years time, it could be that I want to start a Formula One racing team and that all changes, but that's fine. At least now I know right now I'm grounded in knowing what I'm working towards rather than just investing for the sake of investing because some guy on the internet told me that I needed to.

Iona Bain: That's so interesting. And also it's not just about you retiring early, you stop doing anything and you just live a life of hedonism because for a lot of people, I don't think that would appeal to them. Like for some people it might appeal, but it sounds to me like you're somebody who still wants to keep doing things, who still wants goals and purpose and a form of work, but the kind of work that you want to do one day.

Sammie Ellard-King: Totally. We need purpose as humans. We need to be doing something. Having a break is fine, absolutely. But then you're going to want to start doing stuff and getting involved in things. And so I think you need a purpose. I watched my granddad retire. He was a co-founder of Ronnie Scott's Jazz Club in Soho and he run the club for 50 years. He retired and completely fell apart as a human just because he didn't have the purpose of sitting at home watching racing all day. That just wasn't good for him. And so I think it is massively you have to have something you hang on to.

Iona Bain: I love that. And let's quickly talk about the gap as well between where you are now and that point of financial freedom. What kind of behaviour should somebody be thinking about if they want to close that gap faster?

Sammie Ellard-King: Yes, yes. I love this. You've got your dream life, you've worked out how much it costs. Now you can put £250 a month towards that. Hop on any of the big pension sites or compound interest calculators out there and put those numbers in and say, " Put an average return in," and see what that might look like for you. Okay, for me to get to that number, it's going to take me X amount of time. Well, what happens if I increase it by £100, £200, £300? Oh, okay. You can start to see that timeline contract. And so understanding that's really important. So okay, I want to do it in X amount of time. I need to contribute this amount. Let's say I can put £250 in at the moment, but I need to be putting in £400. Now I have a gap of £150, which I then need to go and find.

And when people start these side hustle ventures or looking at all of these different things, this is kind of a lot of the reason why I think they're doing it. By having that awareness, you don't now need to start this venture which is going to do 10 grand a week, like all these YouTube videos tell you. It takes a pressure off because if I said to anybody, it was like, " Could you go out and find an extra £50 this month?"

I challenge anyone listening to this, you probably could if you put your mind to it. So finding the first £50, okay, now I need to find another £100. Over time I can probably get there if I keep thinking about it, just takes that switch. So the gap of where you are right now and where you want to get to can be shortened if you put these things into place and that's what I did. That's how I got out of debt. And so I just like, " Well, this makes perfect sense for me to close the gap to get to my big goal of where I want to be." And so I just used the same concept.

Iona Bain: Absolutely. And also get to know the numbers-

Sammie Ellard-King: Yes, absolutely.

Iona Bain: ... because it sounds like sometimes people do shy away from them, but actually that's what's going to give you the information you need to make those changes. There is this psychological element to wanting to meet those goals whereby people might think, " Am I going to miss out? Am I going to have a bit of a miserable time of it until I get to that point? I'm just going to be living in the future rather than living for today." What would be your advice around keeping today fun and joyful and happy whilst also working towards those goals?

Sammie Ellard-King: Everything is a compromise. When you're doing that exercise with the gap, am I okay with this is a question you have to ask yourself and is it impacting me living for today as well? I've extended my timeline a little bit on my own gap because I went through a period of life where I was just like, "Money, money, money into investments and that's all it is." And then I was like, " I've done nothing for three years. I've actually done nothing. I haven't been away. I haven't done anything. All I've done is focus on me."

And yes, it put me in a great position, but actually what happens if I did get hit by a bus? I would really regret that. And what I've done now is I've put balance back into my life a lot more and it's freeing in a way because I know I'm covering myself in the future. I like to call it flexible pounds and slow pounds. Stocks and shares, ISA and slow pounds in your pension, having some flexible pounds and some slow pounds makes a lot of sense. So I can make decisions in the nearer term as well as the longer term.

Iona Bain: That's a really great way of looking at it. And that concept of slow and flexible pains, I feel that I have concentrated a lot on building up my pension the last few years because I'm self- employed and felt like I had to really catch up as my earnings got better. But now I'm definitely going to be prioritizing flexible pounds a bit more and putting more money back into investing for the medium term. So finally, Sammie, this has been such a fascinating conversation, but if there is one thing that you would love to leave our listeners and viewers with as they go away, make a cup of tea, wait for the kettle to boil, what should they be thinking about if they want to achieve financial freedom?

Sammie Ellard-King: So honestly, you work, I think it's 11 jobs on average in your lifetime, which is crazy. And a lot of people think when they leave their roles that their pension has just gone, like it doesn't exist anymore, but it is your money. My mom found £60,000 recently in a lost workplace pension. It's completely life changing for her at those ages. So going back and checking, there are tracing services, the .gov provides one. So just go in and check in. You can phone up your old HRs or send emails out to them and just get the details of those pension pots and then potentially if it's right for you, you can consolidate them into one. It's like sort of finding extra money under the couch, I quite like it.

Iona Bain: Who doesn't like that? Brilliant. Thank you so much, Sammie.

Sammie Ellard-King: It's been a pleasure.

Iona Bain: And just like that, we've come to the end of this episode. We hope it's giving you loads to think about and helped you figure out how you can start working towards your financial freedom, whatever that may look like for you. Next time, Leon Ward from financial education charity Money Ready is joining me to talk about one of the most powerful things that we can do for the children in our lives, building their money confidence early. This podcast is brought to you by L&G. We would really love it if you shared this episode with a friend or family member who might get a little bit richer from hearing it just like you have. If you want to keep up with the show on YouTube, TikTok and Instagram, you can find us at Legal & General. And if you've got a question or a topic that you would like answered on the show, all you need to do is get in touch on our socials. We would love to hear from you. Take care, see you soon, and thanks for listening.