With the current instability of the financial markets there has never been a better time to make well-informed early retirement plans. Have you considered supplementing your income with a passive income? Most people understand the current financial struggles and as such have turned to passive income streams.
The truth is that nowadays social security systems fail to provide the safety and security you would expect, especially with the rising rates of inflation knocking on the door always. Fortunately, there are other steps you can take to protect your retirement plans. You could make smart saving decisions by speaking to a financial planner about early retirement. We have decided to share a few smart ways to retire early in this article.
Before going any further, we all know early retirement is a dream that most if not all of those currently in the rat race want to achieve. You dream of having that feeling of independence, more time on your hands, less stress and more time to pursue your hobbies. The good news is that early retirement is a dream that can very quickly come true. And you don’t have to be a millionaire to achieve it and enjoy your years after retirement. Remember that you will only be able to get your retirement money after you have reached the retirement age as stipulated by law. That’s right; this means that for you to retire early, you must work extra hard and extra smart.
So, how can you ensure you retire early?
The answer is simple and may surprise you. All it takes is a little sacrifice, smart planning and smart investing. Here are some tips and tricks that you can use to help you in your journey towards financial independence and therefore early retirement.
Live Within Your Means
You probably have an idea of your estimated cost of living by now. However, this is not enough if you are working towards saying bye to employment as early as possible. You need to find out exactly what your cost of living is. Know what your numbers are. How much you earn and how much you spend. Have a figure for every expense. Know your bills, education, mortgage, entertainment, food and any other activity which uses money in one way or another. One of the most important things to do in life is to live according to your income. You should never for any reason spend more money than what you earn! Show off and copying others are some of the reasons why many people are spending more than their income.
Save! Save! Save!
It is true that the notion of saving has over time proven to be easier said than done. It requires a high level of discipline and maturity. These two are a tiny price to pay when you consider what you are going to achieve in the end. Once you have figured out your cost of living, take it out of your income and find out how much you have left. The amount remaining after taking care of all your expenses is what should go into your savings.
If you find it hard just to put cash in your account and letting it sit there, you may consider using the money in making extra payments to your loans to help clear them much faster. Yes, this is also a form of saving and a much smarter one at that. Ensure that any extra income made is directed to your savings.
Make Smart Investments
Have you started saving your money yet? If you have, that’s great. But wouldn’t you want your money to ‘grow’ from where it is? The answer to this is just one word, invest! Do a research and find out what are the investment options available to you. With as little as $1000, you are sure to find a smart investment opportunity. Here are some ideas on where you can invest with a bit of income that will not take up much of your time.
- Investing In the Stock Market – the beauty of this is that you will get a brokerage firm to do all the hard work for you. That does not mean however that you sit back and wait for your broker to do it all. Do a proper research about the stock market, find out how money is made and how money is lost. It is essential to invest in a business or a company that deals with what you understand. Yeah, this will help you avoid making a blind decision, and you will know what to expect during changes in the trends in the stock market.
- Cryptocurrency Investment – there has been a growth in the popularity and the value of cryptocurrencies lately. These are believed to be the future of world monetary exchange, so you do not want to be left behind. However, this is a very high-risk investment so you need to trade carefully and go in knowing that you could lose big or gain big.
- Bluechip Stock Investments – while this may be expensive to get, having stocks from a Bluechip company means that your money is well protected and you can only gain from it. Bluechip companies are highly reputable and have been known to stand firm even in adverse economic conditions.
Reduce Your Cost Of Living
The very first step towards becoming rich is reducing your cost of living. The less money you spend, the more you will have to save for early retirement. What exactly does lowering the cost of living to entail? It involves making deliberate steps to living simply. It may include moving into a less expensive house, trading off your car and using public transport or other forms of cheaper transportation such as cycling. It may mean forgetting takeout and making your meals at home.
Cutting down on your cost of living earlier also enough means that you set the standards as to how you are going to live after retirement. When relying on your pension, you cannot afford to live an expensive lifestyle. Not only will it strain your finances, but it may also require you to get another job thus making your retirement efforts useless.
Avoid Debts And Pay Your Debts Early
One thing you should know is that not all debts are bad. A house loan, for example, is an outstanding debt because once you are done paying for, you become a house owner. Another debt that you may be paying off is your college loan. Of course, this is also not bad because, well, you got the education. While these two debts are okay and justifiable, it is essential to take steps to finish paying them off as early as possible because only then can you start making genuine retirement savings.
In your quest for early retirement, avoid debts by all means possible. Simply put, avoid credit cards debts and avoid buying things such as clothes and other luxury items using borrowed money. If you cannot afford it, let it go. Paying off debts means that your available income will be reduced and therefore reduce what you out in your savings.
Okay, Let’s Cut To The Chase
Nobody wants to work for the entirety of their lives. But, chances are you will have to unless you start making smart decisions right now. If your choices are intelligent enough, you might even enjoy the luxury of retiring early. The above clues are just a stepping stone to help you on your journey to early retirement. Stick to them, and you will see your fortunes grow.