If you have not yet retired, what are some money secrets you follow to strive for your goal of retiring early?
If you retired early, what are some of your favorite money secrets to retire early?
Early retirement is not something I ever, ever considered before this year. As I started to create this personal finance blog and posting more, I inevitably started to write down goals. One of those posts was completing my first financial SWOT analysis.
I now want to retire by age 55.
The 7 best secrets to retiring early
- Start by (literally) writing down a goal of retiring early – whether it is a financial SWOT analysis or a simply typing it in a mobile app notepad, I think it is important to write down goals. In some ways writing down your goal makes you accountable. Now you have something to which you can strive. The road to financial freedom or financial independence takes so much patience and self discipline, referring back to your written down goals will help remind you.
- But make your goal a SMART goal and create a plan – in my full time marketing job, I sometimes complete a SMART goal, which means your goal is defined as being Specific, Measurable, Achievable, Relevant, and Time bound. This will help you create a defined plan. Your plan needs to consist of understanding your budget, how much money you are bringing in, how much additional income you can bring in, how much you are spending, how much you are investing, etc.
- Budget to help keep your finances organized – budgeting is annoying and that is why I ignored budgeting throughout my 20s, the time I needed to budget the most. Nowadays with so many different options to budget using your smartphone, there is no excuse. I spend just a few min every month using rounded numbers for my monthly budget. You need to be organized with your finances to reach your goal. You might find that paying extra for HBO can easily be cut if you look at your plan to retire early.
- Automate finances through apps or through your bank – spend that extra brainpower and stress on things that actually move the needle to follow your early retirement plan. Why stress out about going to several different accounts and then making sure the bills are paid. Keep it simple.
- Invest in yourself – this includes paying yourself and also investing in yourself by developing new skills or enhancing existing skills. I firmly believe that the most successful people are always learning and improving themselves. This inevitably leads to making yourself expendable. In my full time job as a digital marketer, I take what I learn from my daily podcast listening sessions or business book reading sessions and apply those learnings into my job.
- You must save and diversify your investments – investing in yourself will lead to eventually helping you earn more income whether it is your full time job or your side hustles. With much uncertainty still surrounding these unusual times, now more than ever it is important to take a look at your personal finances – specifically, savings accounts. In addition to typical retirement accounts such as a 401(k) and IRAs, a savings account can be an additional safe place to park your money such as for emergencies. In addition to saving, you absolutely must invest because of the concept of compound interest. After you pay off your debt, start by increasing your savings rate and investing in a retirement account. You will eventually cap out how much you can invest in your retirement account. The next step would be to make investing decisions as easy as possible by investing in a combination of low cost ETFs (index funds) and bonds. The older you are, the more weight you want to put towards bonds because bonds are less risky. Do not play around with individual stocks just yet.
- Ignore the naysayers, stick to your support system – I think it is extremely important to focus on your goal and financial plan regardless of what others think. You also want to be mindful of the company you keep around you. It is easy to get sucked into keeping up with the Joneses. One of my favorite Kevin Hart bits is to stay in your financial lane.