I met the couple who turned £100 into £1M without being high earners and discovered their secret to retiring early

Alan and Katie Donegan have achieved the seemingly impossible dream – they retired aged 40 and 35, respectively.

The couple, who have been married for 13 years, hit their goal of quitting their jobs after years of extreme saving.

When they embarked on their mission to retire young, in 2014, Katie was working as an accountant at Deloitte and Alan ran his own confidence and skills training business, and they were living in a £270,000 two-bedroom flat in Basingstoke. By 2019, they had quit the rat race to travel the world on an income of £100,000 a year.

The Donegans say they started by saving £100 a month and turned it into £1million in just five years. Now they are sharing their advice for anyone wanting to do the same.

Alan and Katie have set up a free online ten-week course, where they promise to share the secrets to their success and help you achieve ‘financial freedom’.

Recently they won the British Empire Medal (BEM) for their services to financial education through the money management course Rebel Finance School.

So could you retire decades early after taking their 20-hour course? Toby Walne signs up to find out…

Week one: Cut out impulse purchases to buy freedom

The course has no hidden fee, and I can dip in and out of Alan and Katie’s recorded YouTube lessons whenever I like, so I sign up with my name and email address, eager to learn.

Once registered, I click on the first of the ten two-hour-long videos, called ‘Create a gap’.

Dressed casually, Alan in a ‘Freedom’ logo blue T-shirt and Katie wearing a black-and-gold patterned off-the-shoulder top, they are talking to a camera in what appears to be a hotel room with a sofa bed just behind them. Their friendly manner puts me at ease. There’s no sermonising, just a no-nonsense approach to how to take control of your finances.

Alan starts: ‘We are so excited to see you all today’ – before revealing a frightening statistic that the average person retires with a pension pot of less than £70,000, when we probably need closer to £1million. He asks: ‘How would you spend £1million. House, car, holidays?’

‘Yes!’ I shout back at the computer screen in greedy anticipation. ‘No,’ Alan says in a serious tone. ‘Buy your freedom first.’

To achieve this, I must ‘stop comparing pineapples’ – looking over the garden fence trying to keep up with neighbours.

I’m asked to calculate the gap between my income and my spending.

It’s time to get out the pen and paper (I can’t do spreadsheets), for some honest number-crunching.

The couple say I must break my ‘death by one thousand cuts’ habit, referring to all the small purchases most of us make day-to-day that appear harmless but really add up.

They explain I could start by cutting unused subscriptions and making impulse purchases harder, for example by no longer using a single-click buying option on online shop Amazon.

The steps to building your pot are the same regardless of what you earn, they say. Reduce your spending, increase your income where possible, take the gap between the two and invest it.

Building their empire required an iron will, they say – they even sold their home.

Katie was an actuary earning £58,000 a year and Alan was on £63,000 a year as a business trainer when in 2014 they embraced extreme budgeting. They started by investing £100 a month in stocks and shares – but soon stopped spending anything that was not just for basic survival needs, such as food and bills, until 80 per cent of their income went towards their retirement plan.

The pair subscribed to the mantra of an online community called Fire, which stands for Financial Independence Retire Early. The movement is popular in the US and advocates investing as much as possible in your youth so you can stop, or reduce, the amount you work long before retirement age.

The Donegans even sold their flat and invested the proceeds. They currently pay £42 a night to stay in a five-star hotel in Bogota, Colombia.

The couple talk about a magic formula to show how I could set aside £50,000 in a decade. Their example is a family blowing £12 a day at Greggs, five days a week (which adds up to £60 a week or £240 a month).

They say if I stop spending money on these snacks and invest it in stocks and shares – which they calculate may rise by 10 per cent a year in value (a rather generous expectation) – after ten years, by using this maths, ‘instead of sausage rolls you could have £50,400’.

Week two: Sell up and invest in stocks and shares

As I tune in for week two, Alan begins by saying: ‘Society tells you to buy the big car and the big house – but the car is a money pit, and property is a valuable liability.’

This is where they started to lose me with their hardcore mantras. Apparently, it is time for me to change my ‘direction of travel’ and stop being brainwashed by societal pressures. ‘Where focus goes, energy flows,’ Alan says.

To be truly free I will have to sell the car and home and invest the proceeds in stocks and shares. I might then live somewhere relatively cheap abroad. Perhaps I, too, could go and live in Colombia? No thank you, I am happy here.

Week three: Write a ‘letter to money’

Katie admits to feeling ‘a bit down’ when she initially reached her £1million freedom fund goal – as she had no idea what to focus on next.

Alan says he was reduced to tears – and put off money as a teenager – when he tried to pay for his share of a Chinese meal but his dad threw the £20 note in his face. His dad was a multi-millionaire in the 1980s but later lost it all.

This left him hung up about money for more than a decade – believing it was the root of all evil rather than the key to unlocking his freedom.

He believes a better understanding of our complicated relationship with money is vital.

The task this week is to ‘write a letter to money’, says Alan. This requires us to reflect on what we want out of money – how do we want it to help us in life?

For me the answer is to make life easier. Unlike the Donegans, I am happy to plough it into my home and fritter it away – but I accept this won’t help me retire anytime soon. I will need to be extra disciplined when saving for old age.

Week four: Understand the power of compounding

The Donegans explain that being able to earn interest on your interest is key to financial success. Katie gives an example of someone putting aside £200 a month for two decades (£24,000 in total) making £203,673 if they enjoy 10 per cent investment growth a year – with ‘compounding doing all the heavy lifting’.

This sounds like a great recommendation that any of us could put to good use. There’s no doubt that the longer you save or invest for, the bigger the pot you’re likely to grow. However, it’s hardly advice unique to the Donegans. After all, it was Albert Einstein who suggested that compounding is ‘the eighth wonder of the world’.

The Donegans follow up with a warning that compounding works the same with debts. ‘Buy freedom from debt first,’ they say, which is sound advice.

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Week five: Share money goals with loved ones

In week five’s video I’m told I need to ‘align values’ with my partner so we can have the same ‘vision for life’.

As money causes most of the arguments between couples, it makes total sense. Katie admits she once ‘found another man’ to guide her on the financial journey – an influencer called Mr Money Mustache – leaving Alan ‘lost and alone’ as they failed to share the same vision for how to plan their finances for the future.

But their money fixation brought them back together and they now hold a ‘monthly finance meeting’.

No chance for me – I believe in financial secrets. My wife and I have separate bank accounts for spending and a joint one for household bills, and it is key to our relationship success.

But you have to commend their outlook and understand a need to share a joint vision if you’re aiming to achieve a goal as extreme as retiring at 40.

Week six: Invest in global tracker funds

This week is all about forming an investment strategy.

The Donegans share how they previously used financial advisers who, they say, creamed off hefty commission and recommended expensive actively managed funds.

Speaking of these funds that are managed by investment professionals, Alan tells viewers that ‘96 pc fail to outperform the market’ – and in Alan’s case ‘lost my life savings’ in the 2001 dotcom crash.

The couple believe low-cost tracker funds are the way forward. These follow the world markets and their performance.

‘Don’t bet on one horse – own all the horses in the race.’ They believe a single fund, such as the Vanguard FTSE Global All Cap Index fund, could be just the ticket.

Charging 0.23 pc a year, and with annual returns averaging 13 pc over the past decade, it is hard not to be won over. ‘Manage it like a dead person,’ says Alan, who believes cheap index funds left alone offer the best approach.

Today, their fund is worth £2,453,612, even though they no longer work and make an annual loss on this free course.

Their ‘freedom fund’ has dipped and grown over time, including when the Covid pandemic hit and when Trump’s tariffs spooked the market. That hasn’t stopped the pair continuing to put all their money into stocks, even though having some of your money in bonds is a widely recommended way of reducing investment risk.

Katie says: ‘We learned that volatility is the price of admission.’

The couple say you can put all your money into the Vanguard FTSE Global All Cap Index fund, but they also have some in the Vanguard FTSE Developed World ex-UK Index, because when they started investing the Global All Cap fund was not available.

I take this with a pinch of salt, however, because any financial professional will tell you to spread your investments across a range of funds, geographies and industries.

Financial advisers can also help with money management far beyond fund recommendations, for example with tax planning or making sure you have enough money to achieve your life goals.

Week seven: Avoid hefty fund management fees

Alan admits ‘fear’ put him off investing after he lost a substantial amount of money in the stock market crash of 2001 – but that such emotions get in the way of making money.

He says: ‘You cannot change what the market is doing but you can change what is going on between your ears,’ he says. The stock market can be an emotional roller coaster but ‘you will only get hurt by jumping off’.

To re-enforce the previous week’s call to go for ‘boring’, passively managed index funds over actively managed funds, he explores fees.

The Donegans believe you should never pay more than 0.4 pc a year.

Research by investment services group Morningstar in 2024 found the average fee for an equity passive fund in the UK was 0.17 per cent, compared with the average active fee of 0.81 per cent.

‘Fees are the silent killer’, says Alan. He adds: ‘The finance industry has no incentive to push cheaper index funds.’ It is hard to disagree with such a sentiment.

Week eight: Make the most of tax breaks

Before investing, the Donegans say you must consider where you can get the biggest tax breaks.

They suggest starting by putting your money into a private or company pension if you are not planning to retire before age 55. This is a highly tax-efficient way of saving as you receive tax relief at your marginal rate for any contributions you make into a pension. You can save up to £60,000 a year or 100 per cent of your earnings, whichever is highest.

You can also put away up to £20,000 a year in stocks and shares Isas where any gains are tax-free. The couple say you must keep aside cash for emergencies but set a limit. Any money in cash accounts is missing out on the returns it could be making in the stock market, they say.

All these sound like uncontroversial – but not exactly groundbreaking – recommendations. Tax relief and employer contributions are effectively free money. And investment returns tend to outperform interest on cash savings over the long term.

Week nine: Calculate a retirement goal

The Donegans used a simple formula to set their ‘freedom fund’ target.

‘You need to save 25 times your annual spending,’ Alan says.

By working out how much you spend over the course of a year – or would need to spend if retired – you can figure out how much you need to squirrel away. This is based on the principle that if you keep your money invested, it will almost always grow over the longer term (with some bumps along the way).

Say you need an income of £40,000 a year – you would need to save up a £1million pot to retire.

If you are flexible with your spending and are happy to reduce your expenses in years where the stock market falls, or take on work to top up your savings, you could save a smaller amount.

The Donegans tell me their very first target was annual spending of £34,000 and a total pot of £650,000. But once they understood their spending patterns more, they revised their annual spending target to £40,000 with a total pot of £1million invested.

The simplicity of these calculations is appealing but there is still a nagging feeling at the back of my mind that all of this is built on a travelling lifestyle choice that is not for me.

Week ten: Congratulations, you’re ready to become financially free

At the end of the course, my initial suspicion this was going to be a get-rich-quick secret sell has vanished.

This couple is clearly motivated to share their story to help others and, begrudgingly, I must admit that I have learned to look at financial planning differently.

Oddly enough, the course taught me that the extreme approach to early retirement is not a personal goal – but I must still become more focused on saving for the future.

There is wisdom in their observation of the ‘just one more year’ syndrome that leads people to cling to work as they do not have a plan they can stick to.

However, I am now going to start drip-feeding spare cash into a cheap global tracker investment so I, too, can build up a ‘freedom fund’.