Step 2: How to save
Saving money is a critical step in early retirement. Early Retirees don't have 40+ years in the workforce to accumulate wealth, so time spent working must be maximized. Wealth is the foundation of future happiness, and saving cash builds wealth.
Here's a question: Are you looking to build a serious stockpile of money to enable early retirement? I hope so. This blog hits on aggressive saving and wealth accumulation. In fact, it's one of my favorite subjects.
As I learned how to save over the years, I was struck by a remarkable concept: High incomes are great, but they alone don't enable early retirement. The key to early retirement lies with saving, not income - regardless of how much you make.
Whatever your salary, save that shit! Let your money work for you in the market. Invest. Saving money is not tough, but it does take discipline. Try downgrading your phone.
Track your wealth with Personal Capital (you'll thank me later).
Understand that wealth builds wealth. The more money you have, the more you make. Stock market growth is exponential, not linear. Think of it like this: 10% of $1,000 is $100 bucks. But, 10% of $100,000 is $10,000. Boom, exponential growth.
Check out these posts about saving those greenbacks for growth:
How to save money
- Remember, it's never too late to save, and
- It is often easier to save more than to make more
- You need not be rich to save a ton of cash
- Knock out those impulse buys
- Sell stupid stuff that you don't need, like trucks
- The 4% rule is a fine guideline to help you estimate savings
Lifestyle has a lot to do with it
- My wife and I are test driving our lifestyle right now
- Don't worry about being minimal; sensible will do
- The smallest changes make the biggest improvements
- How to master your early retirement lifestyle: Part 1, Part 2 and Part 3
Early retirees lead a unique lifestyle. They understand what makes them happy and do certain things to ensure their savings does not run out.
For example, future early retirees:
- Prioritize retirement over temporary happiness
- Know where their money is going
- Get out of their comfort zones
- Are generally optimistic
- Spend money on experiences rather than on things
Are you ready to kick your savings into high gear? If so, this blog will help.