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7 Steps to Retire rich and early

7 Steps to Retire Rich and Early

How can I retire early?

If you live frugally and invest your extra savings, it is possible to retire early. You can calculate how much you will make off of your investments, with the average interest rate and use the benefit of compound interest to set yourself up for early retirement. 

 

Are you thinking ahead and planning for retirement? If so, kudos to you. It is best to start planning for retirement when you are young, yet many do not want to think that far ahead. However, if you start planning while you are young, you can take advantage of compound interest and you will have more money than most with these tips.

You can retire rich and early if you make a plan and start saving for retirement now. Even if you are in your thirties or forties, you can amp up your savings and still retire early.

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7 Steps to Retire Rich and Early

 

# 1 Make it automatic

If you want to retire early one trick to help is to make your savings automatic. By making savings automatic you will be able to save more and have more money to spend in retirement.

Check with your employer to see if they offer a 401k or 403b and if they offer a match, take advantage of it because it is free money. Your HR department can take money out of your check before taxes for these types of accounts. Since you are taking money before taxes you will not see a huge decrease in your take-home pay.

If you do not have a 403b or 401K option you can still make savings automatic. You can set up sinking funds with your bank and have money put aside in a separate account for savings and/or retirement. You can also invest this money in a Roth IRA so which is another type of retirement account you can utilize. My husband and I use Fediltiy’s online accounts. They are easy to set up and offer no-fee accounts which you can easily manage yourself. Check out Fidelity today and start your retirement account now.

If you take money out of your check before you see the money you are making your savings automatic and you will be more likely to save money


 

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#2 Invest in your future

Do you invest money? Unfortunately, many are afraid to invest. They see the volatility of the stock market and this keeps them from putting their money away in stocks. Yet did you know you can invest with little or no money nowadays?

 

There are so many ways to invest and you can invest safely so you don’t have to worry. One way to invest safely is to invest in mutual funds or exchange-traded funds. With mutual funds, you are investing in several high-performing companies and therefore have less risk of losing all of your money. You can also look at low-cost index funds which are also very safe and you can use your investing platform’s calculator to decide how much you will need to contribute to retire at a certain age. 

Check out this compound interest calculator on Investor.gov and play around with it to see how much you can save in a certain amount of years.

 

Also with new companies such as M1 Finance and acorns, it is easy to invest with little money. You can start out with a small amount to get your feet wet and as you watch your money grow you can feel more confident to invest more money.

These platforms make investing so easy. You can check them out below:

M1 Finance

Acorns

 If you start saving when you are young you can take advantage of compound interest. When you are ready to retire you will have accumulated on the nest egg that will help you be rich and stay rich in retirement.

#3 Cut out the little things

Another way you can retire rich and early is to cut out the little things now. Are there things you are wasting money on that you could eliminate from your budget? If so you will want to trim your budget and get rid of unnecessary spending. You can use extra money to invest as mentioned above.

 

Oftentimes we continue to pay for things we do not use, wasting our money without even realizing it. I challenge you to write down everything you buy for the next two weeks. In doing this you will recognize the unnecessary things you are spending money on and you can decide if they are important enough to keep as part of your budget, or if you should cut them. You will also need to look at credit card statements to make sure that you do not have automatic billing set up for items you no longer use. One example is a gym membership that you are paying for it but have not gone to in the past year. It is time to cut this expense. Don’t worry, you can always add things back in as you build your savings and retirement account. 

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#4 Save up for it

See something you really want? It is okay to want things, but make sure to wait a few weeks and test yourself to see if you really still want the item. If it is important to you and will enhance your life, then go ahead and buy it. Yet, try to save up for it if you do not have enough money readily available. Set aside a certain amount per month and don’t put your item on a credit card. Try to avoid debt at all costs so you can continue on your path to retiring rich and early.

 

7 Steps to Retire Rich and Early

 

#5 Get rid of debt and pay cash

 If you want to retire rich getting out of that is key. If you are carrying debt it is time to develop a plan to get out of debt as soon as possible. One method I recommend is the debt snowball method made Popular by Financial Guru Dave Ramsey. In this method, you will pay off your smallest debt first while continuing to pay your minimum balance on your other debts. For example, if you owe $1,000 on one credit card and $3,000 on another you will pay off the thousand-dollar balance first and maintain your minimum balance payment on your higher card. Eventually, you will pay the lower amount off and you can put the money you were using toward this credit card payment toward your $3,000 higher credit card debt payment. As you can see you are snowballing your payments by adding on the first debt payment to the next payment and you will continue to do this until all of your debt is paid off.

 

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#6 Have fun but don’t go crazy

 I also believe in enjoying life because everything must have balance. So continue to have fun but look for frugal ways to have fun. Remember your goal is to retire rich and retire early. If you are spending all of your money now you will not have a lot of money to work with during your retirement years.

If you want to get serious about retiring early with a cushion of cash, it is best to build your savings now. Don’t forget to calculate bills your expected future bills and plan out how much you will need for a monthly budget, including annual bills like taxes or car insurance.

Once you have a number, you can start planning. If you do not have enough projected savings to cover your retirement expenses, you will need to cut out unnecessary spending. Yet, you can still have fun. If you want to retire early to enjoy life, you probably want to enjoy life now too.

You can find many free activities to occupy your time like city concerts or library activities. Find something you love and then search for a free or discounted version. Keep your goal in mind before dealing out a hefty amount of money for excursions or pricey vacations. Try a staycation to save money or use these budget vacation tips.

 

#7 Forget about the Joneses

 

 Often people look at what their neighbors, co-workers, friends, and family have and feel insecure or left out if they do not have the same material possessions. Yet, the problem with this way of thinking is no matter how much you buy you will not feel fulfilled. You will train your brain to always want more and be looking for the next bigger or better thing.

So don’t worry so much about what the Joneses have and remember when you make purchases that you are making them because you want the item and it is important to you, not because you are trying to impress someone else.

Remember why you are saving. Not everyone around you will have the same priorities or values and that is okay. But if you want to retire rich and early, it is best to make some small sacrifices now and forget about material possessions. Find a few things that are really important to you and keep those items in your budget. Cut the rest.

 

7 Steps to Retire rich and early Final Thoughts…

If you plan to retire rich and early, you can use these steps to help you get ahead and pay down debt. If you take advantage of compound interest, you can really see your money grow and plan for your financial future.

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