The majority of people have aspirations to retire early, whether it’s so that they can pursue their hobbies, travel overseas or simply live life on their own terms. If you are someone who aspires to retire early, it will take a lot of commitment and discipline from a young age. Here are some tips to help you exit the workforce at a much younger age than the average person.
Live Below Your Means
It’s easy to go overboard and spend large amounts of money as soon as you get a pay rise or land a new job that allows you to earn more. However, if you genuinely aspire to retire early, you will need to get into the habit of living below your means and not spending down your entire paycheck month after month.
A powerful way to increase your chances of retiring early is to trim your largest monthly expenses, such as; housing and transportation and keep it as affordable as possible. This means you should consider buying a smaller house even if you can afford one that’s large, and driving a basic car instead of a higher-end model. The less you spend on living costs, the more money you will be able to allocate toward your long-term goals.
If you want to retire early you will need a huge amount of savings, especially if you aspire to retire at an age where you are not yet eligible to receive the pension. However, you will also need income outside of those benefits to cover your costs, and this is where your personal savings are super important.
Get A Side Hustle
You may only have a few expenses in your budget that you are able to reduce and eliminate. In that case, your ticket to building some more savings could boil down to getting a side hustle. The money you earn from that second job can go into the bank so it’s there for you when you need it.
If you are not sure how to find a side hustle, think about what your schedule looks like. If it’s intense, you may need to find a gig with flexible hours, like doing web design or data entry from home. Otherwise, you might manage to secure a steady second income stream by working evening and weekend shifts at a local restaurant or in retail.
Boost Your Super Account
Although you might be too young to access it straight away, your super will most likely make up a major portion of your retirement savings, so increasing it while you’re still working is like making a payment to your future self. You could try adding lump-sum payments into your super whenever you can manage putting more money aside.
Set Up A Budget
Following a well-organised budget is one of the most effective ways to track how much money you are spending and gain more control of your finances. If you haven’t created a budget yet, go through your bank and credit card statements from the past 6 to 12 months and figure out what your various bills consist of. After you have done this, aim to figure out what they cost you on average while you might pay a set $900 a month on rent, things like your grocery and utility bills may vary.
While you can create your budget using a spreadsheet (or even good old pen and paper), there are different budgeting apps are worth looking into to help you stay on track so that you can achieve your goals.