A lot has been written about early retirement and financial independence. Be it the 4% rule, or reducing expense or buy what you need, not what you want. However, there is one key thing to do if you want to retire early.
Automate your savings.
Yes, this is the most important thing to do. Why, you ask. Reason being, achieving early retirement or financial independence is not a short term target. It is pretty long term. And when I say long term, you can easily assume 10+ years. While a lot of people start their journey with enthusiasm, maintaining it for 10+ years requires lots of discipline. And all of us have limited energy, hence, best thing to do is to automate your savings.
What we do?
We have figured out our expenses by tracking our expenses for a few months on excel sheet and making sure we are reducing avoidable expenses. Post that we settled at an expense according to our lifestyle and a saving amount we need to retire early.
As a next step, we made sure that our savings were automated. For example, automatic deduction in PF, max contribution to employee stock plan and running SIPs. This works best, because then we don’t have to worry about missing investing every month or overshooting our expenses. Beyond this, if we ever get any bonus or random income, we make sure to first invest a portion of it and then spend.
Of course, we don’t want to downplay the importance of reducing your expenses and investing in the right instruments. But in order to do that, one key thing to do to retire early is automating your tasks as much as possible.