6 Principles To Build Wealth And Retire Early
In 2016, Steve Adcock had saved $1 million in savings and retired at 35. While everyone does not wanna retire so early, no one wants to be broke either. Steve says if you live by these these six basic principles you can build wealth too:
1. Make financial freedom your No. 1 goal
The first rule is the most important, and it has little to do with money. Make it your top priority. Depending on your retirement age goal saving is essential. To reach his goal of retirement at 35 Steve saved 70% of my income. Steve said making the changes to save 70% was like getting into shape: You’ll only lose or gain weight if you change your diet and fitness habits. And you have to want it badly enough to keep at it.
2. Actively boost your income
Steve said he was always thinking about ways he could use his skills to actively boost his income when not working in for his full time gig. Documenting your life with video, writing and starting a blog with advertisements is an easy way to slowly build extra income sharing your interests.
3. Invest in appreciating assets
Through the power of compound interest, our assets don’t just build linearly. Instead, appreciating assets build exponentially.
If you invest $1,000 and it appreciates 10% (or $100) in a year, then your new base starting point in the next year is $1,100. Another 10% gain is $110, not just $100. Add a couple of zeros to that and we are talking retirement money.
4. Automate, automate, automate
I always like to take the hands-off approach whenever possible, especially when it comes to money.
- Automatically contribute to our 401(k) and IRA accounts
- Automatically transfer money from checking into savings
- Automatically pay our credit card bills
Automation will avoid late fees, interest charges or reductions in your credit score.
5. Know where your money is going
One of the most effective ways to eliminate debt is to know exactly where your money is going. ..... Every penny matters.
A few simple actions will can make a huge difference in your finances:
- Look at your bills instead of throwing them aside. Make sure you understand every line item on your bill.
- “Fun” spending should come after paying your bills and funding your retirement accounts.
- Don’t ignore small expenses. (Study these spending habits Steve says they can tell you a lot about what is working against you. )
- Monthly subscriptions are notoriously forgotten.
6. Detach yourself from things you don’t need
Take time to think about what is really important to you and spend "fun" money on that. Steve said you would be surprised how little money you need to enjoy the things you love.