Everybody who is currently stuck in a job would like to achieve financial freedom and retire early. Contrary to expectations, you need not work for as long as 40- 50 years to be able to retire and can do so much earlier if you are able to lead a disciplined and planned life. Unfortunately, that is where most of us tend to be lax and are unable to achieve the goals we set for us.
The concepts to follow are simple and as under:
1. Control your spending habits
I know this is easier said than done but in reality, once you are clear about how you wish to go about it, you can indeed cut down on a lot of unnecessary spending that takes place due to peer pressure, unwanted stuff getting accumulated and splurging on occasions without giving a thought to whether it is indeed necessary.
For instance, you can skip eating out and rely more on homemade food. It is not only healthy but also good for your pocket. But many of us keep eating out due to laziness and a strange attraction for outside food despite being aware that this food in the long run is not healthy for us.
If you have the luxury of a home garden, you can even grow some of the vegetables and save on those expenses as well. Similarly, you can borrow music, books and movies from your local library and not buy them outright. After all, how many of us go back to watching a movie frequently.
The ideas above are not novel and are followed by students even today. Unfortunately, once we start earning, we tend to become relaxed and let go of these habits.
2. Inculcate the habit of saving early
It is very essential to plan early about how much money you would like to accumulate for your retirement. That will motivate you to start saving early in life and that is a major element of financial discipline you need to exercise. Many of us put off this task and end up not saving much and thus lose out of the compounding multiplier effect that money can give you if you start saving early in life.
The recommendation is to put away at least 10-15% of your income into some savings plan and when you combine this with lower spending, you will easily be able to save sufficiently for your retirement.
3. Putting savings into productive ways of earning you passive income
I referred to the compounding multiplier effect of money. What I actually meant was that if you are able to make your saved money earn you passive income by way of interest or by way of capital appreciation, you would be able to leverage much more out of your savings and thus build a nice retirement income nest. Some of the ways are by investing in real estate, buying stocks and so on.
It is indeed possible to retire early and all that is required from you is some self discipline.
