In the last few days, I have come across multiple videos talking about financial management and early retirement.
For a second, I thought it was just my algorithm. Maybe Instagram was giving me a hint, but then during a Sunday brunch with friends, someone brought up the subject.
Apparently, more and more young people are getting vocal about their finances online. They are pushing toward early retirement as well as settling debt and maintaining a tight budget.
Now, as someone who cannot maintain a budget to save a life, I was baffled.
I mean, in this inflation, how are they doing that?
My research told me that not only was it possible, it was quite likely that most people around us were already on this path.
If you are interested and want to retire in your prime, then keep reading. Below, I will share my opinion and strategy that I have designed for early retirement after careful research.
- Clear Your Debts
If you are living in the US, there is no way you are debt-free.
While most people think that student loans or medical loans are heavy enough to be considered as debt, in reality, your credit card debt, car mortgage, and house mortgage are equally hefty.
To deal with this situation, your first goal should be to address your debt situation. Make sure you earn enough money to clear out your debt as soon as possible. Additionally, make it your life goal not to rely on any kind of debt in the future.
- Cut Your Expenses
Cutting expenses might seem like an obvious step. However, once you start implementing it, you will realize that it is truly challenging.
Most of us simply consider everything as a necessity. This means that all the frozen items, take-outs, new outfits, and makeup that you have been buying need to be carefully considered.
Another important thing to keep in mind is to cut down on billing costs. With the right negotiation skills, you can easily bring down the monthly costs. For instance, if you have an internet connection and you realize that you are paying a high bill, try negotiation. In my case, I already use altafiber Internet, which offers a wide range of packages at affordable rates, so there was no need for me to negotiate with them.
- Set a Goal
I know setting a goal sounds ambiguous. I mean, you already have a goal of going debt-free, right?
Well, to help you understand better, your goal needs to be not just measurable but also realistic, time-oriented, and achievable. This means you cannot be overambitious, thinking about saving money. Instead, you need to have a timeline with each step elaborated with the right numbers.
For instance, clearing out a 6 million debt in the next six months is not achievable unless you are earning more than 2 million per month. Keeping this practice in mind, you can now set a basic goal like clearing my car loan in the next 8 months.
- Diversify Your Income Streams
This is one of the most challenging steps because it will literally determine if you can be successful or not.
Now, the issue is that most of the so-called finance specialists will just tell you to save more money. But what if you are not earning enough?
No matter what you do, you will end up spending all the money on your basics and bills. So, the only solution is to maximize your income so you can easily save some money.
When you’re building those crucial passive income streams to avoid burnout, don’t just limit yourself to online methods; think about tangible assets too. Investing in and operating vending machines is a classic, effective way to generate hands-off revenue, as these physical assets are purchased once, placed in high-traffic areas, and only require periodic stocking and maintenance to produce consistent cash flow.
How can you do that?
One simple answer – the internet. You need to search for all the basic skills that are related to your current profession or degree, and then look for ways to earn money through them.
Keep in mind that multiple income streams can only help if you have more than two active income streams, while the rest are passive. This will help you avoid burnout in the future.
- Budget Your Options
Yes, you read it right: budgeting is the key.
If you are tech-savvy, there are so many different apps you can try; otherwise, you can use the traditional Japanese method of budgeting as well.
Your goal is to write about your income, overall expenses, current budget, saving goals, and finally, the bills where you can reduce your spending.
You can then replicate this template and use it for a monthly budget as well.
- Make Healthy Choices
I know, this might sound a little odd. I mean, why healthy choices?
Well, working on multiple income streams and cutting costs usually result in compromising on lifestyle and living standards.
Now, as a finance enthusiast, this might feel like a decent plan, but in reality, you might be working toward bankruptcy.
How?
Most people end up consuming less food, staying up late, eating out more, and eventually, this affects their health. So, to avoid this issue completely, try to make healthy choices right from the beginning because good health eventually help you to save better and enjoy your life after retirement.
Simply put, saving money in this economy is hard; we all know that. However, the above-mentioned strategy will offer you a head start to eventually start saving for retirement.
