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Retiring early is the ultimate dream scenario, with every single millennial hoping to discover the newest app, biggest trend or simply just getting lucky by starting a local business that’s successful. Problem is, most of us are afraid to break away from a steady paycheck or gamble on ourselves to take the risk to do so. Or, worse, we’re so caught up in our day-to-day that we don’t find the time to even create ideas, which leave us complacent in developing something new.
For Grant Sabatier, the author of a new book called “Financial Freedom: A Proven Path to All the Money You Will Ever Need,” and the founder of the website Millennial Money, he found the not-so-secret recipe to retiring early — and he decided to share it with us.
Penning a piece for Business Insider, Sabatier breaks down how building wealth takes three basic variables — income, savings and expenses — and that, while most financial experts talk about decreasing expenses and saving more, increasing your income is the real way to financial freedom, which, ultimately, can lead to retiring early. Take a look at what Grant Sabatier had to say below.
The problem with most personal financial advice is that it focuses primarily on two of these three variables: how to reduce expenses to increase your savings. But you can only cut back so much before you feel like you have to live in a cardboard box if you ever want to be financially secure.
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In order to build wealth quickly, you need to maximize the potential of all three levers. By reducing expenses while simultaneously growing your income, you’ll have more money to save/invest, which will help you increase your savings rate.
In essence, as Sabatier mentions above, it’s easy to decrease spending and save more, but there comes a limit at some point. I mean, who’s to say that all that saving doesn’t end up going towards an unfortunate expense like a hospital bill or something, right?
The author and financial expert continued to give his personal strategy, which included increasing his income, which helped him on his way towards retiring early. Here’s what he had to say about how he achieved it.
When I was trying to figure out how to save a million dollars by the time I turned thirty, I did the math and realized that even if I saved 50 percent of an annual salary of $50,000 and it compounded annually at 7 percent, it would take me at least twenty-five years to save $1,250,000. And by then, because of inflation, even that might not be enough to retire.
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I always viewed savings as an opportunity, not a sacrifice. Or as Brandon sees it: “It’s not about deprivation, it’s about optimization.”
Even if you don’t make a lot of money, if you can reduce your expenses as much as possible and increase your savings rate, you can retire much earlier than you would otherwise. Although this is difficult to do, there are incredible stories of teachers, janitors, public service officials, and others who super-saved their way to early financial independence.
Literally every 1 percent more you save will decrease the amount of time you’ll need to work to reach financial independence.
Grant Sabatier brings up saving more, which is obvious, but it’s the thought of getting a side hustle or freelance job to increase your salary that will help you earn more money to save, without decreasing your overall budget. That means that, if you have a salary of $65,000 right now, getting a side hustle that pays even $1,500 each month can lead to $18,000 more each year. You may have less nights and weekends going out with buddies, but think about how much you’ll bank.
And, while Sabatier was one of the lucky ones who was able to save millions on his way to retiring early, he adds one last point that’s worth noting, saying, “Remember that retiring any time before sixty-two (the traditional retirement age) is early retirement, so cutting one, two, five, or ten years off your retirement is an incredible accomplishment.” That’s important to remember, because, while you may not become an instant millionaire like he did, putting aside hundreds or thousands more each year can lead to retiring earlier than your peers.
You can buy Grant Sabatier’s newest book, “Financial Freedom: A Proven Path to All the Money You Will Ever Need” on Amazon for more pro tips about money.