Saving Enough For Your Early Retirement
Imagine you wake up leisurely at 8 am, enjoy a healthy breakfast, hit the gym, have a good lunch and a nap thereafter. Since you have some memorable conversations, your evenings are spent with the family complemented by the giggles from your partner and kids. Calm is not only in abundance, but stress is also nonexistent. This looks like a dream, right? Well, these are some of the things that inspire most people to join the FIRE Movement. Also known as financial independence and retire early, FIRE Movement is something that most people in western countries have been practicing for a long time now.
The Principle of FIRE
The key to taking early retirement is having investments and an ample bank balance that can support you. Although most people save at least 30% for early retirement, those who aim to retire early only spend a maximum of 30% of their income with the remaining 70% put on various saving and investment plans. The secret to retiring early is learning how to live and spend below your means. While most people spend thousands in luxuries such as cars, meals and other things they do not necessarily need them. FIRE aspirants, on the other hand, choose to live simply with small homes, economical cars, and few loans.
What you should know
Although the idea of retiring 20 years earlier is good, you need to know that it’s a minimalist life that’s high on time and low on stuff. While you can comfortably retire at 40 if you save at least 70% of your income this kind of lifestyle won’t be heavy on you. For those who aim at attaining this lifestyle, the only new purchases that they make are to replace the old ones. The whole idea of luxury living and social lifestyle does not always go down well with them. This, therefore, allows them to have a down to earth living experience with good memories to cherish.
How to apply FIRE Movement to your life
Here are some of the things that you need to incorporate into your lifestyle if you want to join the FIRE Movement.
Decrease your expenses- Regardless of your aptitude for the frugal lifestyle you need to cut costs on various areas of your life including transportation, food, and housing. As a matter of fact, some FIRE movement practitioners sell their cars and bike or walk to work.
Evaluate your priorities- If you take the time to evaluate your priorities and what’s important to you, you can set up clear goals that will help you measure the kind of decisions that will shape your future.
Avoid lifestyle inflation- Although it’s tempting to improve your lifestyle when your income increases this should never happen. If your aim is to increase the gap between your expenses and income, then you will want to remain in the same lifestyle even if your income increases.
Aim for higher returns- Whether you don’t know how to differentiate stock from a bond or you are a savvy investor, a little planning and research could help you make more money with what you have. It’s, therefore, important to engage in things that can earn you higher returns.
Even if early retirement is not in your plan, there are still valuable takeaways and lessons that you can get from this lifestyle. If you think you may start practicing FIRE Movement, there are various tools and resources that can help you.