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One of my goals in life is early retirement. I feel like for most people this is more of a dream than an achievable goal. People always laugh when I say that I want to retire by forty-five. They think it’s so impossible to do this. To those who think it’s impossible, it is going to be impossible. To those who think it can be done and are actively doing things to put them a step in the right direction it can become a definite reality.
I love to mention this in my posts because I think it’s so fascinating, only 20% of your money is the knowledge of what to do with it, and 80% is your behavior with it. For someone who’s bad at math (meaning me!) I am pretty darn good with my money. It’s not rocket science, you just need the desire to achieve your dreams.
The problem that most people have when it comes to this “dream” is that they don’t know where to start. Well, guess what? I’m going to show you exactly where to start! And it’s a lot easier than you’d think.
Early retirement starts with a budget
If you can’t keep track of your money, and rather your money is controlling you, early retirement will always be a far out dream. Instead, you need to control your money and pay attention to where your money is going. The best way to track it is by a budget.
In your budget you keep track of your expenses, your income, your savings, your financial goals, etc…
Your budget is the frame for the bigger picture, it’s your starting point to get you on the right path. Without it you’d be lost, because you are oblivious to what your money is doing.
After you start your budget you can then plan your financial goals for early retirement. You need to be tracking how much you spend each month to know how much you can save each month. And if you’re spending more than you’re making, don’t worry! I have a post for you right here to guide you to know what to do if you’re expenses outweigh your income.
Having the Mind for it
After you start your budget and plan your financial goals you have to get in the right mindset. Know that it is an achievable goal, follow those people who have, or are currently, achieving that goal. There are so many people out there that have retired early all ready and following what they do can get you there pretty quickly. Or, you can also just follow me since I am on track for reaching early retirement (:
Once you have your budget in place you need to work on maximizing your savings. There are three ways to do this:
1. First, you can increase your income. I know it’s something that sometimes seems far-fetched, and is not easily accessible for most. But, if you’re committed to early retirement than you can find a way.
You don’t necessarily need to find a second job, if that’s what you’d like to do than by all means do it! One of the ways I increase my income every month by a couple hundred dollars is just working online for a transcription company called Rev. Whenever I have free time I get on and end up making a little extra.
Now, you’re probably saying, “What are you talking about? I don’t have any extra time!” I have got just the thing for you! One of the places families spend the most money on is groceries. What if I told you that you can get money back by just buying the groceries that you normally would? I’m being totally serious. There’s a few rebate apps that you can just download on your phone and take pictures of your receipts or the items you purchased and get money back on them. I usually end up saving about $150 or more a month by doing this. It may not sound like much, but having an extra $150 every month can save you $1,800 for a whole year. That’s $1,800 more than I had before!
My favorite apps that I use for this are Ibotta, Checkout 51 and Receipt Hog.
To find the specific links to the apps that I use (the ones I mentioned above) go to my post about 5 Ways to Save on your Groceries.
2. Reducing your expenses. This is something I love talking about because it is so easy, and yet people think it’s impossible. Every month there are certain categories in my budget that I know I can cut my expenses in and it’s fun to see how much I can actually reduce every month.
Go through your budget and figure out what you can cut out of in each category. Look at the easiest first like entertainment, eating out, etc then move on to the more difficult stuff.
If you are spending more than you make then you will never achieve early retirement. You need to live below your means to truly start saving. Don’t think that’s living at your means, you DO NOT want to live paycheck to paycheck.
Wouldn’t you be so much happier if you knew you and your spouse could retire early? If you sacrifice stuff that you don’t need (and just want) now, then you’ll be getting a whole lot more than you ever dreamed when you retire early
I won’t go into too much more detail about this because I wrote a VERY detailed post on what expenses to reduce in your budget. You can find that post here.
Let me tell you though, reducing your expenses is a lot easier than you think. Remember you just have to have the right mindset to do it and you will be well on your way of living off less than you thought was possible!
3. Last thing I’d advise you to do is to invest some money somewhere else besides just a typical savings. My husband and I are working on investing into a Roth IRA where you get more interest on the money you put in than you would just a normal savings. You’re basically getting free money for putting money in there. Easiest buck you ever made, right?
Opening up a Roth IRA is what I highly suggest looking into. It’s pretty easy so you don’t have to worry about the market like when you invest in stocks. Roth IRA’s typically also have a higher compound interest rate. (Meaning more return for you, yay!)
If you truly want to invest to help you with early retirement there is one key. Start Investing Now. Don’t wait for next month, for a year, or right before you want to retire. Even putting in $50 or $100 will start you on the path you want to be.
The earlier you invest the better off you’ll be to live financially free. (That totally rhymed and I wasn’t even meaning to do that!)
By doing at least one, preferably all three, of those things you can start maximizing your savings so you can have bookoo bucks for early retirement. Stop thinking it isn’t possible and start taking steps to make it possible to reach your financial goals.
I’m excited to see what ways you save for retirement or what your retirement goals are! Let me know in the comments below (: