How to make half a million quid from changing your soap*

I've always loved fancy soap. Maybe it goes back to that bit in Great Expectations when we know Jaggers is the bomb (sorry) because his hands smelled like 'scented soap'. I've always loved those strong soaps you get in posh department stores. Those big hard robust slabs with reassuringly expensive scents. I think there even used to be one that smelled quite pleasantly of tomato. They're made by Nesti Dante and similar companies. They cost roughly £6 each and last probably two weeks.

But for ages I've had a different soap obsession. There used to be a soap when I was young that smelled clean and basic. Like soap. I think it may have been Pears - not the glycerine one. But it fell off my radar. All my life I’ve been searching for some version of it. 

Well - I found it. Or at least a contemporary version of it. Waitrose Essentials Chamomile soap. It smells clean and soapy and pure. It's £1.70 for 4 bars, which is 42.5p each. I like it, but there’s some little voice in my head telling me it’s not good enough for me and that since I’ve ’made it’ I should get better soap with nicer packaging. Or maybe more eco soap with more natural vibes. I deserve to spend more than 43p on a bar of soap because I’m so freaking awesome. 

So the other day I got some patchouli soap at the Refillery for £3.50. The Refillery is an organic hippy shop where you can grind your own peanut butter into a jar you've bought from home. I like the shop, but it does often feel a bit pricey. Anyway, the soap lasted me just under a week (actually 6 days). 

Let’s do the maths. This is astonishing…

Even though the Nesti Dante looks and seems more 'luxury' and expensive than the worthy hippy Refillery soap, using the Refillery one will cost £213 a year, compared to £156. The Waitrose soap will be just £22. So £195 less than Nesti Dante. 

Now there is an argument for using something beautiful, that you love, that only costs £6 every couple of weeks and makes you happy every time you touch it and smell it and get wafts if it off your skin. Heck, I use expensive perfume. I’m not saying don’t make this choice.

But let's just be aware that £195 a year, compounded over 10 years at 4% is around £2518. Over 20 years it's £6621

Using Waitrose soap costs around £1.85 a month. The hippy one is £17.75. The Nesti Dante one, which is probably my actual favourite, is £13 a month. That's like a Netflix subscription, I hear you say. Or three Starbucks coffees. It’s change! It doesn’t matter!

Indeed. And while I may decide in this case that the saving is not enough to make this change, and that 20 years of Waitrose soap will only yield me the cost of a business class flight to New Zealand (which will actually cost a lot more in 20 years because of inflation, apparently, even though my generation supposedly knows nothing about inflation). Is it worth it? Maybe. Maybe not.

But. Remember the Netflix subscription and the coffees? Imagine you give them up too. Just those two extra things. Spending £5 on coffee a day costs £1825 a year. Netflix at the current rate of £12.99 a month costs £155.88. Add the soap, the coffee and Netflix and you get £2,137.31 over a year.

Compound that over 10 years and it's more like: £27,604. Yes, really. Over 20 years it is a startling £72,568. Just from giving up fancy soap, one subscription and one take-out coffee a day.

What if you were able to shave off a few other daily expenses and subscriptions and hit £5k of savings per year (which should be easy given that we hit just over two grand without really noticing). After 10 years you'd have £64,585. After 20 years it would be £169,787.

That's from saving only £5k a YEAR. Which as we've already seen you can do easily by cutting a few things you won't even notice. What if you saved a thousand a month, once you'd cut everything you could from your budget? Still living a great frugal life, but without unnecessary extras and subscriptions you’ve forgotten about.

Get ready for this. After 10 years you'd have £154,992. After 20 years you'd have £407,457. That's right. Live frugally while also living your dream for 20 years and you could get half a million without even really noticing it. You wouldn't even pay tax on that in the UK, because you'd have it in an ISA.

If you saved the maximum ISA amount of £20,000 a year, for 20 years, you'd have: £679,232. The interest you'd earn on this would be around £2,264.11 a month at 4% interest rate and £2,830.13 at 5%. You could live comfortably on that money in a different way by basically spending it at a rate of 30k a year for another 20 years, without working. If inflation got too out of control then it would at lest yield you ten years of living for absolute free.

Which is why this should be one of your savings goals. And why you should either use the cheapest nice soap you can find, or work out the things you personally spend money on where you wouldn’t notice using a cheaper version.

And that's all using a fairly conservative 4% for the calculations too!**

Of course, Frugirls and Fruguys who live their dreams will probably have more than just one ISA once they’ve got into all this savings malarkey. The point is that being frugal now will make you rich later. Probably more that you thought.

But as we see elsewhere, being frugal makes you rich NOW. Because the greatest treasure you can have is a sense of enough. A sense of plenty. A deep feeling that a good life is a simple life and that your homemade pasta or hand knitted sock is better and more lovely than the one you could get in Selfridges. Knowing you can go a day without spending anything and that doing so leaves you with a warm glow of cavegirliness or rugged tough-guy vibes. 

*More or less

** Please note that these are all projections based on an interest rate of 4%. Interest rates vary, and may be way higher or lower than this.