While in previous generations, people wanted nothing more than a good job and a nice home, younger generations are finding themselves dissatisfied with that lifestyle. Millennials have discovered the the American dream may not be quite their personal dream and they feel they deserve something more.
They say you have to have money to make money, but how long do you have to be working for it? With recent stories of individuals investing in good stocks and retiring early, 45 years of working is looking less like a requirement and more like a choice. Included here are a few tips to help you clock off for good a little earlier than most.
Reduce Your Housing Costs
Living in a metro area with high rent and a poor living situation is disenchanting to even the most optimistic. To begin your hunt for early retirement, try cutting down on your housing costs. This could mean downsizing, or renting out a room in your home; regardless, find ways to pay off your mortgage and bolster your savings quickly.
Live Below Your Means
While this is a critical lesson for everyone to learn, those seeking early retirement should take living below their means especially seriously. Create a budget and prioritize your end goal. Keep in mind that cutting back on exorbitant lattes and shopping trips could result in more time off the clock in a couple of years. Cut back wherever possible and live below your means in order to save and plan for the future.
Know Your Needs
Saving for the future should be your ultimate goal if you want to retire early. This means putting that last day of work date in priority over any short-term luxuries. For many successful early retirees, they live in smaller homes and drive older cars. They do not want to keep up with the Jones’ because they are likely up to their eyeballs in debt. Staying debt-free and steering clear of the latest and greatest is crucial to early retirement success.
For most early retirees, they learn to prioritize their needs over their wants. In order to remove yourself from the workforce, you need to have good interest returns on investments. You also will have to figure out exactly how much money you need to live each month so you can have enough invested. While the math can be complicated, tracking your budget can help you keep tabs on what you are currently burning through.
Don’t Discount Temporary Work
One important factor about retiring early is that you are not banned from the workforce. With the uptick in work-from-home jobs, many people are finding it plausible to take on temporary work when necessary. For early retirees, dips in the market and interest income could hurt their monthly budget, so they blog or do temp jobs to rebuild their portfolios.