We all love to dream of being able to retire early. Although for some of us that is all it will ever be or can you do something to make that dream come true? Yes you can if you put your mind to it and work on certain aspects of your lifestyle and your prospective income.
How to prepare for early retirement will take work there is no other way around it unless of course you win lotto. That in itself is another one of our dreams that more than likely will not happen. Spending all your money gambling on a lotto win is not the way to prepare for early retirement.
Here are several steps that you can follow to help you on your way:
1. Look at your current financial situation
Are you bogged down in debt? How much interest do you pay each month? Do you own your own home or paying it off?
To work out your financial situation, you need to write down exactly how much you spend each month then add it up. Look at the difference between what it costs and how much you earn.
2. Reduce your expenses
With a list of your expenses in front of you it is time to find out where you can reduce the unnecessary expenses. Can you reduce you electrical and gas expenses? Reduce entertainment expenses. Here are a few suggestions:
Reduce the time you spend in the shower
Turn of lights when not in the room
Turn down your heater by a few degrees
Turn off microwave, washing machines and all other facilities when not in use at the wall
Eat at home or invite friends to your home and let them return the favor
Stop going to the shop for a quick coffee, make one at work and cut out those morning donuts
Reduce fees and costs by checking out the options offered by competitive Insurance companies and banks. You may benefit by changing companies or telling them you are dissatisfied with their terms. Talk to them and find out what more they are willing to offer you to keep your business.
3. No more debts
The best and only way to become debt free is make a special effort and pay those debts off as quickly as possible. Use the money you have saved on cutting your expenses and put that towards paying off your debts where possible add that extra few dollars and prove to yourself that you can do it. Pay out the debt that is costing you the most in interest first.
Once that one is paid start paying off the next ones until you have paid them all out. Now cut up that credit card. Learn to save for the article you want or buy a second hand article instead of paying top dollar for the new one and paying interest on top of the actual price.
4. Create a budget
Once you have created a budget, learn to stick to it. Write a shopping list and do not buy anything on impulse only buy the things on your list. Check out what is on special, if you use a lot of any items, it could save you buy buying two of them rather than pay more next week for the same thing.
5. Save for a rainy day
Learn to save that little extra by putting your change in a container at the end of every day. Seal it in a tin and do not use it until you really need it. This will help for the little emergencies that so often catch us all out. If there's no emergencies put it in a retirement or fixed savings account.
6. Learn to do without
Savings will add up a lot quicker if you think before you spend. Do you really need that chocolate?
Do you really have to go to the theater? Could you get a couple of DVD's instead?
7. Change your habits
Learn to go for walks with the dog, the kids or as a family. Pack a picnic and spend the day at the zoo or by the river. Enjoy life naturally and be together as a family. No the kids do not need that really expensive mobile phone, when a secondhand one will do the same job. Take the kids fishing, and go home and cook them on the BBQ or call in at the fish shop if they were not biting.
8. Plan for early retirement
You will need to plan for an early retirement. Work out how much you think you will need, then set yourself goals and save extra money every week or month for that. If you do not save then you will not make it a reality and put everything you can spare into a savings account.