Retiring Early Is About the Little Things

Most of the time when we think of saving money, the word 'sacrifice' comes immediately to mind. And while it is true that starting the process of saving money may require some of that, the end goal is to accumulate the money by making small changes in the short term so that money is more readily available down the road for life's little pleasures, and having more freedom to pursue them without robbing yourself in the short term to enjoy them.

It is important to identify what those small changes are in order to maximize them. It may be as simple as cutting out that daily coffee at an expensive coffee shop, or even cutting out the K-Cups, or even the higher end premium coffee beans or blends we may buy. Switch to Folgers or Maxwell House, or even a store brand so long as you can stomach it. Maybe keep a package of the better stuff for a weekend treat.

Other things that can be cut-down may be those expensive energy drinks. If nothing else, don't buy them at gas stations where the price is usually ramped up. Buy them at your local grocery store, and by all means look for sales if you really can't bear cutting them out altogether.

Fill water bottles from your tap before you leave the house. How bad is tap water really? It's really just a mind over matter thing in all honesty. You can do the same with soda on the run. Buy the soda in 2-liter bottles and fill smaller bottles before you leave the house. A 2-liter bottle costs about the same as a 20-ounce bottle on the run, so you are actually saving quite a lot of money on this doing it this way.

There a number of things, if you examine closely enough, you can probably live without, or at least curb to save a little bit of money. I could make a ton of suggestions. Most of them are even likely to be cliché and very well known, or even obvious. The key is to identify for yourself what is important and what is not in your daily spending habits. And again, keep in mind that what you should be examining are the little things.The nickle and dime stuff. Not necessarily the bigger things.

Okay. One other small suggestion before I move on; start the habit of slushing in your checking account.

What is slushing? It is sort of like the idea of tossing your loose change into a coin jar to cash in later. Simply round up any transaction you make out of your checking account—if you do an annual audit or reconciliation of your checking balance you should be able to determine how much you have slushed and be able to make a good decision about what to do with it.

So what do you do with any savings? It is important to put that money you are not spending to work. I will tell you now it is best to avoid putting the money into a savings account since generally speaking, you earn so little interest it is simply not worth it. Besides that, the key to building your money and creating more value is by beating inflation. Something a simple savings account, and nowadays even a CD, simply will not do.

So, you want to have your money growing in the markets. Even with the ebb and flow of the stock market, history has proven time and time again without waiver that over time, the markets always grow. And if your money is in the market, so will your money grow. But, you do not need to be Warren Buffet in order to achieve a respectable gain on your money. Putting your money into a simple fund that tracks the S&P 500 has always been a good, sound place to put your hard earned, and well saved money.

I do recommend learning all you can about the markets since those in the know do better over time. But the idea here is just to get you into something simple that will provide a better bang for what savings you are able to muster.

The key here is two-fold. You are trying to retain as much of the money you earn today as you can in order to have more of it tomorrow and into retirement. These days I use my money for both of those things. Income replacement, and retirement funding. At some point, having saved and invested over time, it is not so much of a surprise that what you earn in dividends may meet or beat what your actual paycheck is. And once this is accomplished, this is what I mean by putting aside those little things today to enjoy them (and actually be able to afford them) once you have accumulated enough money that it becomes a virtual cash gifter that just keeps on giving.

Haste makes waste is something most people don't apply to money matters. But hastily buying that latte today will surely waste an opportunity to put $5 to work today that could be worth $10 in eight years based on the track record of money doubling in the markets about every eight years. When you start thinking about the dollar here and the dollar there, and what those dollars are worth over time, and how much they earn in dividends and other gains, it starts to make perfect sense. And even should be a little bit exciting.

One last thought, pertaining to the slushing. So, you might say, "But I don't use my checking account.I charge it," to which I would simply say—

If you had money you would not have a need for the credit card, and may be just one of the other little things keeping you away from getting beyond just working for your money and living paycheck to paycheck.