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Financial independence retire early – If in the past we still do not understand what the term financial independence means, now this is a motivation for many people to be able to achieve it. This cannot be separated from the increasingly widespread flow of information, so financial independence is also used as a financial goal.
Who doesn’t want to live more casually? Everyone definitely wants to be in that phase, where they can enjoy the time more and still have an income. Well, speaking of financial independence, in recent years many people around the world have been doing the financial independence retire early movement. So, what is financial independence retire early? Let’s take a look at the following review.
Let’s Get to Know Financial Independence Retire Early and Its Benefits
Financial Independence Retire Early (FIRE) is a financial movement that is carried out by saving up to 70% of income per month and preparing investments and savings of 30 times the annual income.
Getting to Know the Concepts and Movements of Financial Independence Retire Early
Who doesn’t want to achieve financial freedom and retire as early as possible? Well, this Financial Independence Retire Early movement is the answer. By adopting Financial Independence Retire Early as a lifestyle, you at least have the option to live life independently both now and in the future.
Not infrequently Financial Independence Retire Early is used as a reference for retirement as soon as possible. Not to retire in 55, but sooner. Being a retiree at the age of 35 with nothing but time may sound daunting. However, it makes a lot of sense if you learn to invest and save extremes for retirement at the age of 35.
What Are the Benefits of Financial Independence Retire Early?
Invite Us to Start Setting Up a Retirement Fund Getting to Know the Concepts and Movements of Financial Independence Retire Early. Financial Independence Retire Early is very good because it changes the views of millennials who have been lazy to think about pension funds. Here we are invited to think about what kind of future we want to live in?
If you don’t want to have debt, installment-free, you can travel with your partner without thinking about work, then let’s start this financial independence retire early movement! Directly this movement makes us think that pension funds are very important in the future. In addition to being able to live with our wishes, the existence of a pension fund can break the sandwich generation chain.
To Reduce Unnecessary Expenses
Separating these needs and desires is very important so that the FIRE movement can be achieved. Today, we live in a time where lifestyles have become more varied. Not to mention the development of technology can make spending swell if we are not smart to manage it.
Call it a discount promo on each beautiful date on various e-commerce. Anyway, at the beginning, middle, and end of the month, there must be promos. If we cannot manage finances well, and also psychologically then surely the pockets will be broken. The Financial Independence Retire Early movement strongly emphasizes that we can control ourselves so that spending is more maintained.
It’s Time to Have Passive Income
If you want to retire early, then you must be more creative in creating passive income. Don’t be too complacent with the current salary that has reached seven or eight digits. You need passive income in order to achieve this FIRE goal.
Passive income can be done in many ways. Like opening a small business according to passion, working part-time in the digital world such as being a blogger, YouTuber or you can develop the skills you have to open a photo service business for example, and also online classes. There are so many opportunities that you can use to earn passive income every month.
Savings and Investments Are Priorities
If you want to retire early with the FIRE movement, then you must prioritize savings and investments. The greater the portion you save or invest, the greater the opportunity to reach the early retirement phase. Saving and investing with a portion of 50% of the salary may be too much for you now.
Because it is possible, you have installments that must be allocated per month. Here, you need to save and invest a realistic portion. Yes, realistic according to salary and expenses. Want a portion of what percentage please adjust to the needs of each. But make sure, every month you must set aside to post savings or investments yes. Because if you do it regularly, this will form positive habits.
Tips for Achieving Financial Independence Retire Early
However, make no mistake. Some of the strategic sacrifices implemented will give financial independence and retire early practitioners space to indulge. So, basically, the principles of Financial Independence Retire Early can be accessed freely by everyone. Well, to achieve Financial Independence Retire Early effectively, then you need to pay attention to some of the following tips:
- Maximize employer matching with retirement plans, such as financial institution pension funds or employer pension funds. Choose and sort expenses that include needs or desires. Allocate some of your salaries to save for retirement funds, yes.
- Invest deeply in the right instruments, such as low-cost index mutual funds to generate higher long-term returns than cash.
- Start investing in commercial real estate assets or rental properties that can generate predictable income.
- Pay off all expensive debts, such as cars, credit cards, and high-interest loans as soon as possible
- Take advantage of the credit card points program, as long as you can be disciplined in spending and not cut the balance.
- Learn new skills to improve your skills in the field of work.
- Look for side jobs that match the interests and skills you have to increase your income.
- Live more sparingly.
- Buy a used car and keep it for as long as possible,
- Use bicycles or other low-cost modes of transportation to cut travel costs
- Learn how to repair your own home instead of buying new appliances or paying a handyman, especially if the damage is only minor.
- Reduce regular expenses, such as subscribing to streaming accounts, internet, and other services if possible.
- Take advantage of free entertainment
Who Can Achieve Financial Independence Retire Early?
Anyone can achieve financial independence retire early, no exception you. Start asking yourself a few questions and do the calculations to find out how much you have to downsize to fit into the financial goals you want to achieve.
How much income do you need to maintain your lifestyle in early retirement? How quickly do you want to achieve that goal? both questions are important for you to ponder if you want to reach FIRE. For the first question, as mentioned earlier, a very useful rule of thumb is the 4% rule.
The 4% rule says that your retirement savings must be large enough for you to withdraw 4% per year. For that, you need to save 25 times the annual routine expenses. What you need to note, is that the number of your withdrawals will probably increase due to inflation. So, you need to prepare more savings funds.
To increase the amount of savings and maximize the growth of your savings, then you can use the FIRE method. And remember, this FIRE is all or nothing. In fact, achieving 50% of the goal of financial freedom is a remarkable achievement.
Mistakes to Avoid to Achieve Financial Independence Retire Early
Here Are Some Mistakes in Achieving Fire That You Need to Know and Avoid:
Have No Purpose
To imagine life when you have achieved financial freedom and no longer have to work feels very good, huh? However, you also need to think about what you want to do in your free time later when you retire.
When you are no longer working, of course, you will have a lot of free time. When that time comes, it’s possible that the people closest to you still have to work, so they can’t accompany you every time to fill that void. So, don’t forget to make a plan regarding what you want to do when you retire later, yes.
Also Read Financial Independence:
Spending Money That Has Been Saved
When you want to achieve financial freedom, you will certainly save and invest diligently for many years. In this case, you will probably experience psychological obstacles when you go from accumulating assets endlessly, to spending them.
Moreover, when you already have more savings than you need, the desire to spend it is getting stronger. This is what you should also avoid in order to achieve financial independence or early retirement. Thus the article I can make about financial independence retire early is hopefully useful, thank you.