When you’re at work sipping your coffee, exhausting yourself with the 9 to 5 grind, that is never 9 to 5, do you ever wonder what retirement would feel like? If you’re like the typical millennial in your mid-20s, we are sure you certainly hope for a much better and relaxing future. A future where you don’t have to suffer hours and hours of excruciating work – even if you love your job. You’d want an easy, hassle-free life once you’re retired.
If you think that way, day in and day out, here is a guide for you, to help you retire early, and enjoy the benefits of early retirement:
Start Saving Early:
You know, the real deal is that the more you save, the quicker you’ll get to your future goal of retirement. First, evaluate how much you would actually need to spend in a month once you have retired. To do that, evaluate the expenses you can anticipate during any typical month. Your total expense can be used to calculate the amount of money you would have to start saving today.
Even then, it doesn’t matter whether you earn PKR 500,000 a month or 50,000 a month. You can start saving 50% to 75% of your salary to start building that nest egg for yourself at an early age.
If you desire a peaceful retired life then you must work a tad bit harder in your 20s. A lot of freelance and part time hustling opportunities are now available in the local market. The Internet has also made it easier to work with teams and clients without having the hindrance of communication of time zones to impact your earning capability. If you are working full time, consider teaching over the weekends. If you are already busy over the weekends, consider utilizing your evenings to earn over the Internet. The more money you earn in your 20s, the more you can save, and invest. This means the quicker you can make a move towards your retirement. Got the cycle?
There are several investment opportunities that exist in Pakistan. The key is to understand how to make the best use of these opportunities to earn more and build your nest egg. People in their early 20s don’t really think about investing when there are tons of opportunities to spend. Your game is stronger if you start investing early. Think of it this way, if you start investing PKR 10,000 every month, and earn a standard return of 10% on it per year; you will have a sum of PKR 7,656,969/- saved up within 20 years’ time. Add more to this amount, and you’re magnifying your chances of saving up for your retirement.
Opting for bank loans and other credit options seems feasible, and you feel invincible when you start earning for the first time. But taking up credit cards and debts mean you are spending most of your salary and time paying back these loans. Think of it this way. If you have a monthly installment to pay back amounting PKR 10,000/- and you pay back for up to 5 years, then you are losing out on a significant chunk of potential investment that could have earned you money. To plan your retirement better, you should consider avoiding debt so that you can save and invest to the maximum. However, if you need a personal loan to cover expenses, you should always consider a few variables such as the interest rate, the monthly installment amount, and amount of loan that the bank is willing to lend to you. You can always use our Personal Loan Comparison Tool to come up with an appropriate suggestion for you.
Track your expenses:
Do you know how much you spend eating out, on monthly subscriptions, or on coffee? Chances are it’s more than you think. Start tracking all your expenses for a week or two weeks and you’ll realize the expenses you are incurring that can be avoided. Once you start paring these expenses, you’ll start saving that money as well. For example, a pack of cigarettes may cost you perhaps PKR 170, and if you smoke a pack a day, that means you’re spending a total of PKR 5,100/-. This also means you could pitch in an extra PKR 5,000 to your savings and investments increasing your chances of earning on your investment by more than 50%!
At the end of the day, the key to retiring early boils down to spending less and saving more. But it also means planning and being smart about your investments and earnings. Spend less and plan more and you’ll be well on your way to your retirement in your 40s!