Souqalmal.com outlines the financial management strategies to help you achieve your money goals and the resources you need to retire as early as possible
Early retirement promises the freedom to spend time with family and friends, travel the world or just actively pursue hobbies, all while you’re still young. The only trick is to get a financial cushion in place. Needless to say, it requires a lot of hard work and sacrifice.
If early retirement is your life goal, there will be extra challenges to navigate during your working years. Following are Souqalmal.com’s top five guidelines to overcome the trials and plan a smooth exit from 9 to 5.
Commit to Your Plan
Early retirement cannot be an impulsive decision. Leaving the workforce ahead of schedule requires determination, motivation and a lot of planning. You must keep your goal at the forefront at all times as you steer through life’s decisions. For instance, not overspending and sometimes picking the cheaper, but not necessarily the worse, option can get you closer to your goal.
Save More, Save Often
The importance of saving cannot be overstated if early retirement is your aim. It is never too early to start funding your nest egg. To save big, start with cutting back on the two biggest expenses, rent and groceries. Saving on bigger items can get you ahead in your game but never underestimate the importance of small enhancements like cutting back on impulse buys and avoiding credit card interest.
Boost Your Income
A bigger paycheque equals better savings and larger investments. It is important to understand that you have no time to waste. Let the dream of retirement motivate you. Look for ways to supplement your earnings – Work towards a raise or a promotion, put in some overtime hours, start a business on the side, or take on freelance work or a second job.
Make Your Money Work for You
The next step is growing your nest egg. A larger nest egg means a more secure foundation for early retirement. Once you work out a savings plan and maximize your income, it is time to consider wise investments that complement your retirement strategy. Investments always have a much bigger impact on your net worth than mere penny-pinching. Moreover, income-generating investments can go a long way as a means of support once you take the plunge into early retirement.
Think and Act Smart
The people with sizeable retirement nest eggs don’t necessarily earn big bucks or come from rich backgrounds, they basically think and act smart. Here are a few things to consider:
1. Debt and liabilities
It is important to be completely debt free before you even consider premature retirement. If you have debts to tackle, it will be difficult to put anything aside for your retirement.
2. Retirement budget
Working out a budget will give you an idea of how much you need to live on every month and help you plan your finances accordingly.
3. Retirement location
Whether you choose to continue living in your current accommodation, downsize or change your location, you must take the decision before you retire. For expats in the UAE, the retirement location is usually their home country. This decision is important to work out the cost of living. An unplanned move later could put a serious dent in your savings. If an expat chooses to continue living in the UAE, there is also the matter of residency visa and health insurance to work through.
4. Healthcare
Healthcare is one of the biggest obstacles for early retirees. Not only is it important, obtaining health insurance on your own can also be very expensive. You can consider getting a part-time job with health insurance or moving to a country with public healthcare.
In addition, you must remember to stay positive and confident in your endeavour and maintain ties with your industry and former colleagues.
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