Young and free could be the name of a Bruno Mars’ song. No songs here, just a blog about trusted ways to retire much earlier than age 65.
Everything around us is changing! Many people have never felt this uncertain before #PandemicLife. With increased chaos and traditional systems breaking down, there shines an opportunity for new systems to take form. As scary as it may seem, we are in a position to decide what financial pathways we’d like to forge and follow. In recent years, so much has changed in terms of world-leading companies and currencies. So why do we use a method of saving and retiring that worked a long time ago or never worked at all!
I read about a person who said they experienced their happiest moments in life only in their 40’s. Another eye-catching quote, was by a retiree who claimed to have only felt real relaxation in her 60’s. Why do we delay financial freedom to an age where so many of our other faculties are compromised.
Financial freedom is a result of strategic thinking, planning, and execution. There is some sacrifice needed to obtain this ‘wealth wellness’ known as financial freedom; when you don’t need to work to survive/when your passive income outweighs your expenses. To be clear; because you have a rich source of income does not mean you can be financially free.
Read on for hacks to grow toward financial freedom. Although, these are more than hacks. They are realistic and trusted methods backed by incredibly wealthy people and numerous studies*.
What’s your F.I.R.E number?
You can only hit a target if you know what you’re aiming for. Your F.I.R.E (Financial Independence Retire Early) number is the number you need to have accumulated so that you can withdraw a percentage of it to cover living costs. Explore the many free F.I.R.E number calculators online to figure out your goal.
Cut down those pesky expenses!
A fun opportunity to get creative on stretching your cash! The pandemic has brought us an opportunity to refine our cooking skills and cut down on expensive takeout (also a chance to be healthier). Take time to explore your expenses and cheaper alternatives:
- Could you sign up for cheaper health, car, or household insurance?
- How could you cut down on that power or water bill (here you kindly do good for the environment too:)
- Could you work remotely and cut down on travel costs, makeup, new clothes, and take away coffee?
- Could you pay off your debt – starting with the highest interest incurring ones
- How happy are you with your rent/mortgage payment? If you could move out of the city or get a roommate, your living cost (likely your highest expense), takes a good trimming. Explore House Hacking!
Make that money work!
Now that you have some money or rather, some seed funding for financial freedom, what should you do with it?
Make it work! The Richest Man in Babylon**, a book that shares wealth secrets from ancient times is a great book to draw support from. Wealth during Babylonian times was believed to have accumulated when one saved at least 10% of their income. Beyond this, the book advocates for making those savings work like crazy! In a beautiful metaphor, coins are seen as workers, whose children (interest) should also be put to work; every cent should be working for you, while you earn, while you sleep!
One way to make your money work is through an online platform like EToro which deals with cryptocurrency, stocks, ETF’S and more. If you want to simply save money in a traditional savings account, this is great too! The important thing is to have your money work for you and to invest in the methods that work best for you. You could start to see money as a powerful tool to be wielded rather than just a resource to be spent.
What’s the fuss with property?
So if you’ve cut down expenses and invested at least 10% of your income, yay! You’re becoming seasoned at handling money. Chances are you’re seeing other ways of having your money work for you. Take risks as long as they are calculated risks (said Sir Richard Branson – and he seems pretty good with money).
If you’d like to take a bolder step, consider purchasing a rental property or flipping a property to re-sell at a higher price. This can be a scary space but many people excel and bear the juicy fleshy fruit that property investment can offer (quite literally if you happen to find a place with fruit trees).
Ideally, you want a place that is profitable from day one; where rental outweighs your mortgage and running cost expenses. You could even search for something run down that requires a bit of fixing (rich DIY videos and hacks online) which you can do yourself or with an affordable team.
Truthfully, you’ll shell out cash for purchase costs and perhaps fixing but the influx of money that returns to you will eventually break even with those expenses. Thereafter, aside from maintenance, you take a slice of passive income as your property houses a tenant. Seek out forums or blogs by everyday property investors – there’s loads to learn for free.
While I do not know the exact numbers you’re working with, I can say that reducing day-to-day expenses, paying off debt, and actively saving/investing can work wonders for anyone. You may surprise yourself with how much less you need and how much safer you feel with a growing treasure. At some point, you will find that your passive income starts to outweigh those expenses. This is fun; you want to explore more and you can! Because you’ve been disciplined, careful, and you’ve learnt so much. You may discover that financial freedom is not an end, but rather a beginning into richer avenues! And why on earth would you only want to start exploring at 65!
*The Millionaire Next Door by Thomas J. Stanley & William D. Danko (2010)
**The Richest Man in Babylon by George S. Clason (2008)