Frugal Living Makes Early Retirement Possible
There is a big push to retire early – do some things you want to do. After all, most people don’t work because they love to work. They work because they need the money. Early retirement is a reasonable desire… You need to make it a goal.
People should retire when they are still healthy and young enough to enjoy their retirement.
Frugal living makes early retirement possible. To achieve this goal, there are things you will want (read “need”) to do so you can have the freedom to retire early.
To retire early, you’ll need to live frugally. You must find where you spend money unnecessarily and redirect those funds toward retirement. You’ll need a budget and a spending journal. You may need to work a second job or get a roommate.
Frugal Living Makes Early Retirement Possible
Retirement means different things to different people. Some people just want to escape the rat race – take life easy. Some want to travel. Others have projects they want to work on, like restoring a car, learning a new trade, spending time with the family, or volunteering. What’s your reason?
Unfortunately, many people don’t think they will ever be able to retire at all.
I want you to know how frugal living can help you retire. And not just retire – I will show you how frugal living can make early retirement possible.
There are many benefits to living frugally, the possibility of early retirement being just one.
As with anything else designed to improve life, there are some skills and habits
you need to learn and practice. How to save money and increase savings are the major ones.
Let’s face it, having more money in the bank will reduce your financial stress (which is often the source of most stress). More money is also a huge factor in being able to retire early. To increase your nest egg for retirement, you’ll need financial discipline.
Keep reading to learn the frugal living practices that can help you retire early.
Retire Early Using Frugal Tactics
If you wish to retire early, you’ll need more money. If you retire before you reach age sixty-five, you may need to provide for your own health insurance. You may want to pay off some bills. You may also wish to save a year or two of living expenses to avoid having to collect social security at a reduced rate.
These issues mean you must analyze your current spending and saving patterns and restructure them to make funds available for early retirement.
Reevaluate Your Priorities
Frugal living is about what you want and designing a lifestyle to help you reach your goals. If you plan to cut short the number of years you work, you will need to accumulate more money now. Frugal living makes early retirement possible because you give make saving for it a priority goal. Expenditures that work against that goal are to be eliminated or greatly reduced.
It’s a process. It’s also a practice by which you should quickly be able to increase the amount you save.
To Start: Make a list of your needs
- A place to live
- Food to eat
- Electricity
- Debt repayment
- Medicine
- Doctors
This is a partial list. You may have more or different things for this list.
Next: Make a list of things that are important to you. Retiring early is one of them, but what else
is important to you? This is also a partial list. List what’s important to you. The list can be as long as you want it to be. You should include short-term and long-term goals. When you make your list, be as specific as possible.
- Retire early
- Returning to school
- Buying a house
- Taking a vacation of a lifetime
- Send the children through college
This article shows you how frugal living makes early retirement possible. But there may be other things you would like to accomplish before you retire. You can work on more than one goal at a time. Most people do.
Set Goals
You must know how much money you will need for each goal before you retire, and you need to include your retirement.
After you set and save money towards goals, you’ll find some goals are reached sooner than others. As you reach your goals, redirect the amount you had dedicated to any recently achieved and give that money a new destination. This will boost the progress of saving for (as yet) underfunded goals. Eventually, you will have all the money you need for them.
Hint: After you make your goals list, review it. Is early retirement the priority you thought it was? How important are each of those other “goals”? You can use frugal living principles to achieve your priorities, but you are working with a finite amount of money. Some goal needs to be prime, and not everything can be the number one prioity. (BTW: I’ve included some information below that will help you overcome the issue of a “finite amount of money”.)
Once you know your priorities, you must make a budget to help you determine how much and where you direct the money you’re saving over what period of time. You also have to fund your life in the now. (That may include some cleaning up of your finances from spending in the past.)
Make A Budget
Your budget should include all expenditures to include what you need and want. (This is a savings plan. Your requirements for living now must be met, but met frugally with your future goals in mind.)
If you can’t save for your future right now, keep that list of goals anyway. Review them daily. It will help keep you motivated.
As you make your budget look for waste and unnecessary expenditures… It’s time to start a spending journal.
Keep A Spending Journal
Keeping a record of expenditures as they are incurred is helpful in two ways.
- You know what your budget says to spend on different things as you spend: You will see when a category needs more money. You can also determine to stop spending before the category limit has been breached.
- 2.It will help you find waste and unnecessary expenditures. Then, you can work at cutting back on or eliminating those expenditures.
Recap
Evaluating your spending journal against your budget daily is a good practice. You’ll know how much money you have in each category and how much you have left to spend. You’ll also know if and when your budget stops working before the next pay period. Allowing you to make adjustments. And to avoid the problem in the future.
Take note of wasteful and unnecessary expenditures. It only takes a few minutes a day and is worth it.
Look For Waste And Unnecessary Expenditures
Too often, we mindlessly spend money and can’t account for where it went. That’s a problem. You need to know where every dollar is going and whether spending it is necessary.
Saving for early retirement requires meticulous planning. The list below will show you how to find more money to invest in your early retirement.
Eliminate expenditures you don’t need, don’t bring you joy, or don’t get closer to your goals.
This is a partial list, but some things you may consider unworthy of the expense are:
Magazine subscriptions
Gym memberships
Debt (You pay interest)
- Coffee out
- Cokes
- Dining out
- Take out food
- Car insurance
- Credit card late fees
- Buying lunch at work
- Convenience stores
- Playing the lottery
- Recurring subscriptions
- Quickie lunches out
- Checking account fees
Buying things on sale just because they are on sale, not because you have to use them
- Car Financing
- Too much food
- The latest technology
- Name brand shopping
- Spending money to feel better
- Taxis when public transportation would have worked
- Keeping up with the Joneses
- Revaluate every dollar you spend. Did you need to spend that dollar?
Sacrifice Or Trade
It’s important to see the elimination of waste and unnecessary expenditures not as a sacrifice. Rather, you are trading one thing for another. If you want to retire early, you must do something to propel yourself toward that goal…. Adding money to your retirement plan is the only thing you can do.
Common complaints against this tradeoff are often similar to “I want to keep my morning cup of Starbucks coffee.” I understand totally. You don’t need to give up everything or anything. Just indulge less frequently or give up something less emotionally meaningful. You do, however, need to make spending changes, and eliminating waste and unnecessary spending is an excellent place to start.
I Want To Contribute More To My Early Retirement
This section is where I keep the promise I gave you above for some ideas on how to increase the amount of money you have to put toward your goal of early retirement.
You may need more money to boost your retirement plan. You have seen how frugal living makes early retirement possible. It’s just a matter of funneling cash in the direction you want it to go. But you may still need more. Here are a few options.
Ask For A Promotion Or Raise
You work hard for your money and deserve a raise or promotion. Ask for it.
Word of caution: Some people get emotional when asking for raises or promotions. Keep yourself under control. Don’t say things you’ll regret later. Don’t threaten to quit unless you do intend to quit.
Sell Stuff
Most people have more stuff than they need. I know several people that have three or four TVs. Why so many? Or they have more than one car. Frequently, one car is all you need. (You may need to work out a schedule with your partner, but you can get by with one car.) In many cases, you might not even need a car. You could use public transportation.
It doesn’t stop there. Old clothes, toys, and kitchen gadgets you don’t use anymore – sell them.
If you don’t use it, sell it. And direct the money you earn to your early retirement fund.
Side Gig
Is there something you can do to earn more money? Usually, there is. At the beginning of my frugal life, I worked at a fast food restaurant, mowed lawns, painted houses, removed junk, and more.
When working a side gig, stay focused on why you are doing it, and direct your earnings toward that goal.
Get A Roommate
Having a roommate can save you half of your cost of living.
Look around before you take on a roomie. You’ll need to trust that person with your belongings and some personal information. A good roommate will decrease your cost of living substantially.
Conclusion
Frugal living makes early retirement possible. Use a budget and spending journal to discover where you are wasting money. Then, eliminate the waste. Also, do something to increase your income. Redirect any of that “found” money to your retirement fund.