Being able to retire early is everyone’s dream but not everyone can retire at the age of 30. Even people who love their jobs sometimes wish they can retire early.
According to Business Insider, everyone who wishes to retire early must have 25 times their annual expenses, either saved or invested.
That is a lot of money that many people don’t have. If you’re on a shoestring budget, can you still retire early? The answer is yes you can definitely retire early. Follow these tips to speed up your journey to retirement.
Determine what you mean by retirement
Retirement doesn’t always mean one thing, which is to never work or receive paychecks ever again. That is unless you want to. But retirement can also mean that you want to leave your corporate job or change your profession to something that you like.
Some people think that retirement, especially early retirement, means setting your own hours, fully investing yourself in your hobbies, or following your true passion.
This is why it’s important to know what exactly you want from your retirement. Because this affects your budget and ultimate your first step to early retirement. Think carefully about what your day-to-day activities are going to be like once you’re retired.
And remember that plans can always change, so don’t get too attached to your initial plans. For example, now you think that achieving early retirement is all about money, while it’s not wrong, you might find that having more time is way more important than money.
Some people think that retiring as early as possible is the most important thing, no matter how much money they have as long as it’s enough. This way they have all the time in the world to do what they want, at their young age.
Set a target
It’s time to take a look at the number. How much money do you think you’re going to need to make your retirement into a reality?
I have already mentioned before that saving or investing 25 times your annual expenses is ideal for anyone who’s planning to retire early. I should add that a year’s worth of expenses in cash is important as well.
This theory is proposed by Sabatier in his book, “Financial Freedom: A Proven Path to All the Money You Will Ever Need”. You can read his book to see the formula behind this idea.
I know that it’s not easy to calculate these on your own. Considering that there are so many factors to consider, especially when it comes to investments. But, don’t give up. Once you’ve figured this out, your path to early retirement will be clearer than ever before.
Cut your expenses
Spending less than you earn is the best way to save up money. It doesn’t matter how much you earn but if you spend too much money, you will never be able to retire early. This is why living below your means is effective, especially when you’re working toward your goals.
You can start by reducing your biggest expenses, such as housing, food, entertainment, and transportation. Cut your expenses to the point where you can still live comfortably while saving a lot of money at the same time.
It also helps to know how much the average people spend each month. Then, you can try to spend less than that.
Increase your income
Do you want to retire early? Then increase your income. Cutting expenses can only do so much to help you retire early. Because you don’t want to sacrifice your happiness for the next 10 years or more so that you can retire early. You need to care about your present happiness in order to keep yourself healthy while working toward your goals.
You can increase your income by taking side gigs or working part-time. In this day and age, you can easily carry your skills and promote services to your potential clients online. Many people have earned a lot of money this way, and so can you.
Building a passive income is also a great way to increase your income. A passive income business that generates a minimum amount of money can help cover your monthly bills or shopping. Over the years, your passive income could also grow bigger and bring in more money.
Never give up and you can achieve your goals
Retiring early is achievable for everyone on any budget. It’s not always about money but also about time. Know what you want, save up money, and finally retire.