Saving for an early retirement is no easy task, and no one said it would be without hard work and sacrifice but if you follow these few helpful steps you can increase your savings dramatically.
1.
Pay yourself first, what this means is make sure you contribute to your savings plan first before you put money towards anything else! The easiest and most efficient way to do this is to set up an automatic purchase plan.
You can set up weekly, bi-weekly monthly, etc.
plans to automatically take a specified amount from your bank account and place it in your savings/investment account.
For most people if they don't pay themselves first they find there is nothing left at the end of each pay cheque that's why this tip is so important! 2.
Try driving your car a little longer! I speak from personal experience when I say that new cars are expensive! The average new car costs around $28,000.
Two years ago I decided to sell my 1992 Honda Accord and buy a new one.
I bought my 92′ Accord for $6000 in 97′.
Between 1997 and 2007 I spent less than $2000 on repairs.
My new Honda Accord costs me about $500 per month for 60 months with a $2000 down payment.
So over the course of five years i will have spent $32000 and that doesn't include any repairs that are not covered under the warranty! Over the 10 years that i owned my 92′ Honda Accord between the initial purchase price and the repair bills over the years I spent approximately $8000 that's $800 per year versus the current $$6400 per year that I am now spending on my 2008 Honda Accord.
That's a savings of $5600 per year! If you were to put that $5600 per year for five years in your retirement account and then leave it there after the five years for another 35 years at 6% it would grow to over $188,000.
3.
Evaluate your variable expenses.
Most people would be surprised to see how much money they waste on stuff! After keeping track of my expenses for 6 months I decided that I needed to make some cutbacks.
One thing that I noticed in my expenses was that I was spending just over $5 per day at Starbucks.
That's over $1825 per year on coffee! I decided to start brewing my own which costs me about $8 per month for coffee beans.
That's a yearly savings of $1729.
Once again at 6% for 40 years that's over $267,583.
Now wouldn't sacrificing that fancy coffee help you retire early? Maybe you don't spend $5 a day on coffee but everyone has something in their budget that they could eliminate to save a little extra for their retirement.
So maybe you're not in love with all of these money saving ideas but even if you can put one of them to use you'll be on your way to an early retirement!
1.
Pay yourself first, what this means is make sure you contribute to your savings plan first before you put money towards anything else! The easiest and most efficient way to do this is to set up an automatic purchase plan.
You can set up weekly, bi-weekly monthly, etc.
plans to automatically take a specified amount from your bank account and place it in your savings/investment account.
For most people if they don't pay themselves first they find there is nothing left at the end of each pay cheque that's why this tip is so important! 2.
Try driving your car a little longer! I speak from personal experience when I say that new cars are expensive! The average new car costs around $28,000.
Two years ago I decided to sell my 1992 Honda Accord and buy a new one.
I bought my 92′ Accord for $6000 in 97′.
Between 1997 and 2007 I spent less than $2000 on repairs.
My new Honda Accord costs me about $500 per month for 60 months with a $2000 down payment.
So over the course of five years i will have spent $32000 and that doesn't include any repairs that are not covered under the warranty! Over the 10 years that i owned my 92′ Honda Accord between the initial purchase price and the repair bills over the years I spent approximately $8000 that's $800 per year versus the current $$6400 per year that I am now spending on my 2008 Honda Accord.
That's a savings of $5600 per year! If you were to put that $5600 per year for five years in your retirement account and then leave it there after the five years for another 35 years at 6% it would grow to over $188,000.
3.
Evaluate your variable expenses.
Most people would be surprised to see how much money they waste on stuff! After keeping track of my expenses for 6 months I decided that I needed to make some cutbacks.
One thing that I noticed in my expenses was that I was spending just over $5 per day at Starbucks.
That's over $1825 per year on coffee! I decided to start brewing my own which costs me about $8 per month for coffee beans.
That's a yearly savings of $1729.
Once again at 6% for 40 years that's over $267,583.
Now wouldn't sacrificing that fancy coffee help you retire early? Maybe you don't spend $5 a day on coffee but everyone has something in their budget that they could eliminate to save a little extra for their retirement.
So maybe you're not in love with all of these money saving ideas but even if you can put one of them to use you'll be on your way to an early retirement!
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