Three is the magic number

Reaching financial independence isn’t complex, we feel that it comes down to three things;

  1. Increasing the amount of money you save
  2. Decrease the amount of money you spend
  3. Invest the difference

It sounds simple doesn’t it. You don’t have to be a financial genius or an accountant. Putting it in practice for most will be difficult. So we’ve got three nuggets to help you start off;

Save More

Revolut has a Vault function on it’s app. When you spend on the card, transactions are rounded up and difference/spare change is added to your vault. They also offer cash back. So I haven’t checked mine for a while and as you can see it’s not a huge amount but it’s saving by stealth and the best thing is you don’t have to do anything.

They offer a range of business/freelancers accounts as well (and some cool cards) click here

Spend Less

You’ve adjusted your budget, invested for growth, and generally overhauled your lifestyle to be more minimalistic. Well, if you want to stay early retired, you’ll need to keep it up.

Remember the four per cent rule. Over-withdrawing from your investment accounts in your first year can lead you to get complacent and, heaven forbid, lavish. It’s easy to get carried away when you have all this free time on your hands but you should be continually monitoring your expenses to ensure they aren’t vastly different from when you were working. You didn’t budget to double your expenses during retirement, you budgeted to maintain a similar lifestyle.

Avoid recurring expenses like new debt (don’t buy that fancy new car) and maintain the same frugal attitude you adopted towards transportation, food, and the like.

Invest the rest

If you want your money to beat inflation and grow, investing is essential. However, FIRE fans—like most of us—prioritize keeping the money safe they’ve worked hard to accumulate. While investing can grow your cash, it comes with risk, so it’s key to be diligent about what investments make the most sense for your financial situation. It’s generally a best practice to diversify your investment dollars so you’re not putting all your eggs in one basket. You may consider using ETFs, mutual funds, or other products that help you diversify among multiple securities. Many investors also diversify by asset class and use LendingClub Notes1 as a portfolio diversifier, giving them access to consumer credit in addition to other asset classes they may invest in, such as equities or real estate.

A key point when it comes to investing is to keep an eye on the fees attached to your investments. The SEC warns that even a modest 1% expense ratio on a mutual fund, for example, can cost you tens or even hundreds of thousands of dollars in investment expenses alone. Credit: Lending Club

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