If you want to retire early, one sure fire way of putting aside enough money to give up work for good is to stop spending.
Few people enjoy their jobs so much that they could not retire immediately – and the one factor that stops them is not having enough money.
Retiring at 40 is a dream for most people who are saddled with paying out for growing families, mortgages and other debt.
But for anyone determined enough, retiring in middle age is achievable – if they follow a few strict rules:
Spend less and save a lot more
Financial advisers reckon 15% of salary is the minimum to put aside for retirement every week of your working life. Retiring early means upping the game and stashing half your salary in savings.
Just leaving the cash in the bank is not enough. Harness the power of compound interest by investing in stocks and shares.
If you have two salaries, only spend one
Not so easy for families, but for a professional couple with a double income, making do with the largest salary between both of you and saving the other will quickly grow a cash pile.
Check your spending and most couples pay out more due to lifestyle inflation rather than a real need.
Don’t waste spare time or space
If you have a hobby you can monetise, then raise some cash. If you have a spare bedroom, then take in a lodger. You can easily earn a few thousand pounds a year without paying any extra tax this way.
The Rent A Room scheme allows a £7,500 a year income tax-free, for instance.
If you are already surviving on an existing income, that’s a fair bit of extra saving every year.
Become your own bank
If you have a substantial nest egg, then consider paying off debts to reduce interest payable or even investing in a buy to let to generate a passive income
Consign borrowing to the past and take an advance from your savings – but always remember to pay the sum back plus interest as if it was a loan.
Pare back expenses
Do you need cable? Most of the programmes are repeats or you don’t have time to watch them anyway.
Look at your regular outgoing s and see if you can find the same service cheaper or do without.
