How millennials can retire early
SEE ALSO :Money rules you should breakLive below your means Being able to retire is highly dependent on savings. If you want to retire early, consider your savings the first bill you have to pay each month. Even with a modest income, you can start saving towards retirement. While “save as much as you can” is the standard advice, financial experts recommend setting aside 10 to 15 per cent of your income for your retirement nest-egg -- starting as early as your 20s. If you’re aiming for early retirement, you should probably try to set aside even more than 20 per cent of your income. To increase your savings, adopt a frugal lifestyle- live further from the city centre, cut back on food spending, and avoid unnecessary luxury items. Remember, being frugal doesn’t mean living a life of deprivation; it’s about being more intentional about how you spend your money. Max out employment benefits Unlike older generations, many of today’s young people don’t have pension plans from their jobs. But some jobs offer other saving plans via SACCOs, or even share options. Changing jobs too often can negatively affect your pension -- so unless you’re going for a significantly higher salary, it might be a good idea to find a job at a company you like and work your way up. Always ask for a raise or promotion when you deserve it. Increase your income Instead of depending solely on your job, create multiple streams of income -- either through a side hustle, a lucrative hobby, or a business. Some modern ways of creating more income include becoming an Uber driver, renting out your house or spare room via AirBnB. You can also consider buying and developing land for passive income. If you’re a business person, think about related services and goods you can also offer your clients to boost your income. For instance, if you run a construction business, you can set up a hardware shop. Consider setting aside whatever you make from your additional streams of income towards your nest-egg. Invest in stocks While saving is great, depending solely on savings to get you to your goal can be rather slow. Make your money work for you by investing in stocks. Investing in your early years can be fun -- you have fewer responsibilities to worry about, you can invest in young companies and watch them grow, and you’re able to capitalise on emerging trends. The key to investing for long term goals, such as retirement, is to find companies that have the potential to grow over the next 5 to 10 years. Word of Caution Planning for early retirement can be harder than it seems, so you should consider hiring a financial advisor to help steer you in the right direction. Before you set off on this journey, know that early retirement isn’t for everyone. Some people can quickly find themselves bored without the purpose that comes with having a job, or isolated without the social connections that come with jobs. Also bear in mind that without the benefit of a group plan, health insurance can become more expensive for retirees; therefore plan accordingly.
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