There is a money movement called FIRE and it’s focused on millennials’ retirement plans. FIRE is an acronym for “Financial Independence, Retire Early.” Some young adults in their 30s—and even their 20s—are proving that retirement is no longer an age, it is a dollar amount determined to sustain a desired lifestyle.
From mindsets to minimalist living, the FIRE movement focuses on peace of mind, not just money. It is about building a financial cushion that gives you the peace of mind to do things that bring you fulfillment and contentment, by sacrificing during the early years of life.
However, for those of us who are more mature in age, that financial cushion may not be as established as we’d like to enjoy the longest vacation of our lives—retirement.
Here are five hot strategies to help you get on FIRE to retire regardless of age.
“FIRE” Strategy for Millennials’ Retirement
Mindset Matters
A person’s mindset is a powerful determinant of if they will succeed or fail in anything, especially financially. Based on the Law of Attraction, “like attracts like.” If debt and struggle are the main thoughts and focus then that is what will be attracted. In contrast, if wealth and happiness is the focus, that is what will be attracted and become a reality.
Transformation through Affirmations
Transformation of the mind requires practice. Many people use affirmations to transform to practice positive thinking.
Thoughts become Things
So, as you begin to get on FIRE to retire, remember what you believe has a significant impact on financial success. Think and focus on what is wanted, feel the excitement of receiving it, and enjoy the journey toward retirement.
Save Something Sooner
Get in the habit of saving something as soon as possible. Put money in an account with limited access so you won’t be tempted to tap into it. Here are a few ways to start saving something sooner:
Stash Extra Cash
Putting extra cash from bonuses, tax refunds, or side hustles into a savings account is a great way to build a financial cushion.
Set It and Forget It
Arrange for a certain amount or a percentage of monthly income to automatically deposit into a savings account in a different financial institution separate from your checking account(s). Remove the temptation to transfer money from the savings account to the checking account so you can put FIRE into growing your nest egg.
There’s an APP for that!
There are several apps available to help consumers save automatically. Digit and Qapital are apps that automatically transfer money from a checking account to a savings account based on account behavior and stops transfers to avoid overdrafts.
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Cut Costs
Some monthly expenses cannot be changed quickly, like mortgage or rent. However, for those who speak the financial language of “spending,” the No. 1 budget buster is money spent on eating out, followed by shopping. Here are a few quick ways to put FIRE into cutting costs.
Downsize Dining Out
Dining out costs continues to rise faster than buying food from the grocery store. However, most people do not do well with cold turkey cost-cutting. Instead of eating out every day, reduce it to three to four times a week. After that becomes a habit, reduce it down to one to two days. Many are surprised at how much money is saved by eating at home.
Cut the Cord
Save hundreds of dollars quickly by canceling traditional cable and experiencing the wave of great new television shows and movies via live streaming services, like Netflix and Hulu.
Change Auto Insurance
After year two, auto insurance premiums usually begin to increase. Ask the insurance company for available discounts, like military, credit union member, or good driver. If a discount is not available, consider changing to another insurance company. Auto insurance is usually cheaper in the first two years.
Pay Off Debt
Debt is the leading hindrance of savings for many people. Use these strategies to eliminate debt.
Tally Up
Write out everything you owe, the interest rate, and monthly payment you are paying. Knowing this information will help with determining the amount of debt owed, as well as determine the best debt elimination method to use.
Financial Abstinence
Avoid using credit cards or applying for unsecured loans while working on your debt elimination. Also, only consider refinancing or consolidation if there are a lower interest rate and payment, and the length of the loan is the same or less time as the original loan(s). Extending the term of the loan may lower the rate, but it will ultimately cost you more in interest payments over time.
Mission: Diminish Debt
There are several ways to pay off debt. However, the most popular methods are called the Snowball and Avalanche effect. The Snowball effect focuses on paying off smaller balances first, and then applies those payments to the next smaller debts until the planned debt elimination is complete. The Avalanche effect focuses on taking lump sums of money to eliminate debts. Whichever is selected, find a method that adds to a sense of accomplishment quicker.
Invest
Investing can be intimidating, especially when starting. Here are a few ways to start investing.
Start Small and Grow
Apps, like Acorns, allow consumers to start investing for as low as $5. Other apps, like Robinhood, Stash, and Stockpile, help consumers start investing and have an educational component included.
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Take it to the Max
Contribute the maximum amount allowed into the employer-sponsored retirement program, like 401(K), 403(b), or 457 plans, especially if they match employee’s contribution. That’s free money. Contributing to a retirement saving plan not only reduces taxable income, but it accelerates retirement savings. If contributing the maximum percentage is not possible now, contribute at least 1% – 2%. Increase the contribution by 1% -2% every year until max contribution allowed or up to the employer’s contribution match.
Consult with a Professional
Although there is ample information on the internet, consulting with the right licensed investment adviser or financial consultant can save you time and money to find the best investment options to get you on FIRE to retire.
So, whether you are in your early 20s or enjoying your late 40s or more, it is never too soon or too late to get on FIRE to Retire.
Black Enterprise Contributors Network