Earning, saving, and investment are equally important for growing your wealth
- How saving 25 dollars a week can give you 67,995 dollars
- 11 money saving affirmations that really work
For some it is saving every penny they earn. Some people like to spend more and they want to earn more. Some people earn and save. But don’t like to invest.
Those who want to retire early need all the three.
Earn, save as well as invest.
If you want to retire early , you need to earn as much as you can, save and invest wisely. You need to change your present spending habits and learn new habits that can grow your money. Spending wisely means only spending on what you need not what you want.
1. Think positively about future
If you want to save for future, you should be optimistic about your future. Think about it. If you think you will die tomorrow, you will spend everything today. You would love to do everything today.But if you think you are going to live say another 60 years what would you do? You will definitely like to save for your those years when you will not be working anymore.
But you would love to live a comfortable life. It is up to you what age you want to retire and want to live comfortably after that. I am planning to retire in next five years. And I am optimistic about that. I have planned for those years.
2. Plan your future
Planning the future is necessary. Because without planning, you will not be able to understand where your money is going. You would not even know when so many years have passed and you didn’t even noticed. Planning gives insights into your earning potential , savings , where your money is going and how much you would need in your retirement fund to live same lifestyle.
Planning gives a direction to your otherwise dwindling mind. Plan today at which age you want to retire. And what kind of lifestyle you would like to have then.
3. Set the amount you need for rest of your life
How much you need in your retirement fund depends on what type of lifestyle you live. If you live on an amount of 40,000 dollars, then you would need 40,000/0.04 = 1,000,000 dollars.
Money you need in your retirement fund depends on your current situation. If you live on a bigger amount of money now, plan to have a bigger amount of money in your retirement fund. Once you have figured out the amount, start working towards it. Save money according to your present age.
If you start early, you will have to save less. Because money will accrue interest and will increase your wealth. If you start later then you have to save more money out of your pocket. Whatever your age is, just start saving now.
4. Spend money on cherish-able experiences
Compare 3 hours in cinema hall or a day with your homemade food in a park or on a beach with your family or friends. I simply would prefer a day in park or a day on beach. Experience of that the breeze coming from sea and touching your would give you some memorable moments.You can experience these without spending money.
Go to a park and enjoy the beautiful chirping birds, flowers and big waving trees. Sound of leaves along with the breeze is priceless. This will not only save you money , but also makes you healthy.
5. Delay the gratification
You are so desperate to buy that nice piece of jewelry that you cannot resist the temptation. If that temptation will give you happiness for say a week and then diminish, then there is no value in buying that. As a woman, I can tell you from experience that a jewelry piece give happiness for only few days. Or few times when you wear them. After that it has no value in terms of money as well as happiness.
It is only for immediate gratification. ( If it makes you happy for long time, go for it.). We all have something that make us happy for long time. For me it is clothes. If I buy a dress, it makes me happy for at least two years. But thankfully it is not a very expensive thing to do. When you delay the gratification and urgency to buy something now, after few days the urge will diminish. Delaying the gratification now will give your savings a boost.
6. Save a good amount of money each month
Save consistently. For having a good amount of money in your account to retire early , you need to save as much as you can. Because saving now will give you that amount early which you need to retire. Save consistently and analyze your situation every 6 months and make necessary changes.
Also increase your saving amount every year. Even if it is few dollars.
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7. Never touch your retirement fund
Keep your retirement fund strictly for retirement. Don’t use your retirement fund on a whim. If you need money today, have some money in hand for any emergencies. If you want to buy something, then save money separately for those purchases.
Retirement fund should be for retirement only.
8. Keep an emergency fund strictly for emergency
Always keep an emergency fund strictly for emergency. Save atleast your three months salary in your emergency fund. This fund is not for purchases but it is for the time when you really need it. As in case of not having job, this fund can help you sustain your life for several months.
9. Avoid any debt
If you want to retire early, stay as much possible as away from debt. Debt always add to your financial burden. Personal loans, payday loans, all add up to piles of debt. Try to first have your money in your hands and then buy something.
10. Start as early as possible
Start saving early. It will help in achieving your goal without saving less from pocket. You will be able to reap the benefits of compounded interest. If you start saving later, then you have to save more from your pocket. I am in this bracket. I started saving bit late.Nobody told us about all these things. But now we have lot of knowledge everywhere. Reap the benefits from that knowledge and start saving now.
11. Avoid big purchases with depreciating value
Buying those objects that add to your lavish lifestyle will not increase your wealth. So curb the temptation to buy those things which you want. Rather spend your money and time on those things that will increase over time. Save your money in the accounts which gives you some interest.
If you buy a big car, it will depreciate in value once it is out of its showroom. When you start driving it, its value will diminish with the miles it covers. So instead of buying a new big car now, go fora smaller than what yo want and buy a second hand. Your savings account will thank you for this. And think how happy you would be when you will see that money adding up to your wealth.
Saving for your future is not a big task but needs discipline. Start saving now and retire early from your cubicle life. There is nothing wrong with that, you can even go on doing whatever you are doing. But think if you have saved all the money required for your retirement, how interesting every job will feel to you.
Share this if you like the idea of retiring from your cubicle job or want to make it interesting after all the retirement funds with you.