Everyone dreams of early retirement (at least I do), but for many people, that’s all it is – a far-fetched dream. However, it doesn’t necessarily have to be that way.
While many believe that retiring by the age of 40 is something that only celebrities, lottery winners, business tycoons, and trust fund babies can achieve, I know some people from different walks of life who managed to do this. No, they’re neither lottery winners nor were they born with a silver spoon in their mouths.
In this article, I will share some lessons from early retirees that can keep you motivated to strive towards reaching this goal.
1. Maintain a modest lifestyle and save what you can.
While it is okay to enjoy the fruits of your labor from time to time, it is also important that you maintain balance by saving a portion of your salary. Cut down your expenses and be wise in your spending. Before you buy something, think first if it is essential. You will be surprised by how much you can save if you quit drinking that expensive coffee everyday and start brewing your own drink.
2. Establish a financial roadmap.
When you want to go somewhere, you use a map. The same is true when it comes to your financial and professional paths.
Although things can be uncertain, it still helps to plan the route that you will take to achieve your goals. Those who retire young have a concrete plan in place that includes the safe spending intensity based on the money that comes in and they know what expenses to anticipate. Plus, they also have enough room for unexpected road bumps.
3. Set specific objectives.
By setting targets or clear goals, you will have something specific to aim for. In fact, people work better if there is an impending deadline—so set one for yourself. Additionally, you should make a retirement budget and take the time to determine how your expenses and income will look like after you retire.
4. Develop multiple streams of income, particularly passive income.
In order to become financially independent, you must have a huge amount of capital. While a high salary helps, rapid growth of wealth is more achievable if you have multiple income streams.
Passive income sources are an excellent way to have a continued source of income even after you retire. This may include rental income, online business, or dividends from your investments in stocks.
Many people who retire early have made great investments. So instead of just saving all your extra money and letting it sleep in the bank, why not let it grow by investing them in good assets? By doing this, you will be able to build a solid passive-income portfolio.
6. Learn to enjoy things that don’t cost much.
If you want to retire young, you must learn to spend less and focus more on saving and investing. While it is fun to spend money traveling, dining out, and engaging in other forms of costly entertainment, it would be better if you will learn to find pleasure in activities that are cheap of even free. This may include reading books, biking, cooking, or hiking.
Retiring at 40 is challenging but not entirely impossible. By doing the tips shared in this article and having the right mindset and lifestyle, you will surely be able to achieve this ambitious goal.