Everyone wants to have enough time to enjoy the good things that this life has to offer. Nobody wants to work forever. Things like spending more time with their families or traveling around the world to discover new places are just a few things you can do when you have ample time and money.

Unfortunately, living this dream lifestyle isn’t possible if you still have to work every day to keep yourself float financially but luckily, I will share with you how to save money and retire early! Lets get into it!

Most people think of retiring early as a pipe dream but think of all the wonderful things you can do with your time. You don’t have to wait for summer before you can go on vacation. You don’t have to wait for a paycheck at the end of the month to buy the things that you need. Think of all the wonderful adventures you can go on when you have this freedom. Now, the easiest way to attain financial freedom is to follow the same steps as those who have retired early before you. Here are the steps you need to take to retire early!

**Step 1: Set Retirement Goals**

The first step to retire early is to set a goal. A goal makes it easier for you to achieve financial freedom and retire at the age that you want. A goal will help you answer the question of when you want to retire and how much money you need before you can retire. You may want to work for ten years and retire at age thirty. It is possible. You may also want to retire at age fifty and it is still okay. Knowing what age you want to retire will make you plan well and know how much you need to set aside for retirement. When you know how much you need for retirement and you know the minimum amount that you need to save to meet your goal, it becomes easier to retire early.

**Step 2: Manage Spending**

You also need to understand that it is not about how much money you make; it is how much money you save. That means if you make up to $5,000 per month and spend $4,500 you are not better than the person who makes $3,000 but spends just $1,500. If you do the math, you will realize that the person who makes $5,000 was only able to save $500 while the other person is able to save $1,500. This is a numbers game. The more you are able to save, the faster you will be able to retire. That is why the most important way to retire early is to save more money and the easiest way to save money is to reduce your spending.

“But how do I reduce my spending?” you may ask. The first step is to keep a record of all the things that you spend money on. By doing this, you will be able to tell where you spend your money. You will also realize that some things that you spend money on are also not necessary. For instance, most of your recurring expenses are actually not important. You can simply cancel most of your subscriptions and limit buying another shirt that you don’t need to have more money to save at the end of the day.

Better yet, if you want to understand how to cut your spending then you must understand the rule of 300. This rule is simple and you can use it to calculate how much will be enough for your retirement. It is the amount of money you need to save to meet monthly expenses when you retire. The actual amount of money you must save to meet your monthly expenses in retirement is approximately 300 times that expense.

Don’t get confused. I am going to explain everything you need to know about this concept. How they come about the number and how to estimate your monthly expenditure.

**Step #3: Leverage The Rule of 300**

The rule of 300 can be traced back to the four percent rule. The four percent rule states that it is safe for a retiree to withdraw up to 4% of their retirement account in a year. For example, it is safe for a retiree who has saved up to $1,500,000 to withdraw $60,000 every year. That is $5,000 every month. This amount is equal to 4% of the total amount. At this rate, someone would be able to withdraw their money steadily for up to 25 years.

From the above calculation, the amount of money the retiree needs in a month is $5,000. To get the total amount of money they will need in a year you will have to multiply it by 12. The answer is $5,000 times 12 and is equal to $60,000. 12 is the first multiplier and it is the number of months in a year. Based on the assumption above, he can withdraw the money up to 25 years. That makes 25 our second multiplier. 12 times 25 is equal to 300 and this is where the famous rule of 300 comes from.

If you should reverse the calculations, you can predict how much you need to save to have enough money in your retirement account. You don’t need to do complex mathematics. You only need to calculate how much you spend in a month and multiply the answer by 300. Let us assume that for every month, the total amount of money that you need is $4,500. To know how much you need to save for retirement, multiply the amount by 300. The answer is $1,350,000. That means you need to save up to $1,350,000 to retire.

Although this calculation is simple, it doesn’t take some things into consideration. For example, it only considers that you are only going to live for 25 years after you retire. This may work for people who retire at an old age, lets say 70 years old but your goal is to retire early, so if you were to retire at 30 then this calculation would only get you to age 55.

Chances are you will surpass this age with good health therefore, you have to calculate for more than 25 years of retirement. Luckily, this is an easy calculation to perform. Instead of multiplying your monthly expenses by 12 and then 25, instead multiply them by 12 and then the number of years you will be retired. So if you want to retire at 40 and plan to live until 90 then the calculation would be your monthly expense times 12 times 50.

Using the last example of a $4,500 monthly living cost, you would need $2,700,000 to retire at age 40 if you intent on living until 90. Now obviously no one knows how long they will live but it is generally recommended to target at age that is at least 5 years past the current average life expectancy given that advances in medicine could see humans living longer over the next several decades.

Moving on, another thing that the rule of 300 doesn’t take into consideration is inflation. The value of money that you have today will not be the same in the next 25 years. If you calculate the amount of money you need for your retirement without giving consideration for inflation, you will end up losing money. You have to adjust the amount you want to save for inflation, to save enough money. There are other reasons why you need to save more money too. Your lifestyle may not always remain the same. It is important to spend less and save more but sometimes you may want to satisfy some of the things you desire. You may want to live out some dreams but these dreams will likely cost you money and perhaps that’s money you haven’t accounted for in your retirement plan. Saving more money will also prepare you for emergencies such as health issues. You are at risk of developing various health challenges as you grow older. To treat health conditions are usually expensive and can cost more money than you have planned for.

I believe you now know how to calculate how much you need to save and how to retire early. You also need to understand how to save money. Like I said earlier, the easiest way to save more money is to cut down your spending. You can always cut your spending by considering your recurring expenses. Recurring expenses are payments charged automatically on a monthly basis. They usually require a one-time setup and after that payments are deducted automatically. They include subscriptions on membership services such as gym memberships and the monthly payment for your cable.

There is a saying that a dollar per day is actually worth $9,000. Assuming you have a recurring bill that charges you just $30 monthly. That is like a dollar per day and sounds very affordable. However, applying the rule of 300 which I already explained, you will find out that the actual value in the retirement term is $9,000. You will need $9,000 in savings to keep paying for a subscription of $30 per month when you retire. Before you spend your money on any subscription or any recurrent payment, multiply the value by 300. Ask yourself if you really want to pay that much money on the subscription when you retire. If your answer is no, you should cancel the subscription.

You need to understand the reasons why recurring payments are important. You can save a lot of money if only you cancel some of your recurrent payments. One of the things you need to understand when it comes to recurrent payment is that it is automatic meaning that the process requires little or none of your time to function. This is an advantage if you consider how it helps you to save time for paying for service every month. However, it is a disadvantage when it comes to saving money. The company designed it like this as a strategy to keep you as their customer even when you no longer need their services.

Don’t get carried away. These companies that offer recurring subscriptions know that they must make money too. That is why they make it easy for you to register. Sometimes all you have to do is to fill out a form online and that’s it but they are not designed to be easy to unsubscribe from. You may need to write to the company or make a phone call before they can cancel your subscription.

Since the process of payment for recurring payment is automatic, it is possible for you to forget that you registered for them. There are some services you no longer need but that doesn’t stop the payment from being deducted. The money is usually small but it becomes big when viewed from the retirement plan perspective. So you see that you need to take recurring expenses seriously if you want to save more money and retire early. Also, remember to ask yourself if it is worth it before you commit yourself to any recurring payment.

Some of the most common recurring expenses include memberships, maintenance, subscriptions, insurance, telephone, services, rentals fees, and utilities. Take a look at them and see which one you can do away with or reduce to save more money.

See it is possible to retire early and live the life of your dreams. All you need to do is to save more money and cut down your spending and I believe this you know exactly the steps you must now take to get there!