Tired at job? Learn How to Retire Early

When you are working for the sake of money without any passion in the work, there are very high chances you are getting bored and tired at that job. But you have to do it to fulfil your needs, wants and other family responsibilities.

So why don’t you plan and start making progress towards leaving that JOB early. But you do not know how to do it? You are at correct place to know about that. I will talk about how you can make a plan and start making progress towards financial freedom.

Financial Freedom

Financial freedom is a state of your personal financial. In this state, you do not have to work to fulfil your needs and responsibilities.

Suppose you have to pay EMI 10000 every month. You need 20000 every month to live your life and 10000 per month to provide study and facility to your child. So, in total you currently need 40000 per month. Suppose I say, I will give you 50000 every month then you will definitely stop working at place where you get bored. You will have no worry about any expense so that is called financial freedom.

Though I am not going to give you that money 😂. I am also working hard to get my financial freedom. The point is we have to get at the point where your expenses and your assets income becomes equivalent.

Confusion between Financial Freedom and Early Retirement

Financial freedom gives you freedom to work on anything, anytime and anywhere you want.

Early retirement means you do not want to work at all.

So never get confused and always try to work on financial freedom goal not retirement goal. Though You can make a goal of retirement but that should be divided into two parts and first part of that goal becomes the financial freedom goal. Let’s look at the steps to achieve that much needed freedom.

Steps to get financial freedom

Everyone must follow below small steps to run from your current state to target state (Goal). let’s understand them one by one.

Step – 1 Get debt free

You must rid of those debts, which are taken for your depreciating assets example Bike or Car. If you have taken the debt for your business, this article is not for that scenario. Here we consider only personal finance. How to rid of the debts fast? Look at this article – Trapped? Achieve your Financial Goals with Proven Debt-Busting plan

Step – 2 Build Emergency Funds

Building emergency funds is a very important step to be tension free for any bad condition or situation like losing job due to layoff in your company. If you have emergency funds, you will always get some time to think about earning money in different ways.

Normally, everyone suggests building emergency funds for 3 months, few says 6 months, but I would say you must save for 12 months if you are able to save more money otherwise 6 months are also enough for most conditions. 6 months of time is enough to get back on the track.

We never expect medical condition in general but, in some medical situations, you may not be able to work for 3-6 months, you will always have some money for your regular expenses.

Step – 3 Have Medical Insurance

As I mentioned in the last step, you may not be able to work for few months due to some reason, your regular expenses will be covered by emergency funds but what about medical expenses which are happening and was not expected.

For this type of medical situation, you have to have a medical insurance as per your affordability of paying premium. If you can afford paying enough premium to have 10 lakhs+ medical insurance would be better.

In many cases, corporate company covers some amount but still I would suggest having personal medical insurance. Because if you have left the job for 1 month break and something happens in that period, only personal insurance will help in that situaion.

Step – 4 Term insurance + critical illness insurance

This step is a really tough one to take because here you won’t have any return and this insurance is for ultimatum and some people do not take seriously as they feel strong and think their premium will go wasted.

But let it waste for good. In case of worst-case scenario, your dependents will get enough amount to survive without your able support. Even in case of critical illness, you may not be able to work anymore in future then also that covered amount will help you survive for future life.

Step – 5 Forecast near future expenses

Suppose you have a son/daughter, you should forecast few expenses like

• Education fees
• Coaching fees for activities like sports, dancing or any other activities
• Third party Tuition fees other than School
• Cycles, Travels (School bus)

Your and your dependent’s expenses like

• Short/Long Vacations
• Car
• Bike

By forecasting, you must know the timelines for them and put them on paper so you will be able to understand how much money I have to save for those causes.

Step – 6 Calculate Current Monthly Expenses

In this step, you will have to find out total amount you need every month right now and assuming those will stay the same way at the time of financial freedom, including following components.

• x1 – Regular Home expenses
• x2 – Regular vacations per year divided by 12
• x3 – EMIs which are going to last beyond your financial freedom goal date/year.

Do not include following as we are planning for only financial freedom not retirement.

• Future dream house
• Future dream vacations
• Future dream car, etc.
• Social help

Formula to get target amount to get financial freedom

x = (Monthly Permanent Expenses) * 400

Step – 7 Action Time

We have all the components required to get into action. once you have all the things, you can make SMART goals for each and every component and always give priority to first step and next second.

Learn how to make SMART goals here – Powerful Framework for Smart Financial Goals you must know

Of-course you can work on multiple steps together, but I would suggest going from first to last in terms of priority. That means you can allocate more funds to achieve first step and lower amount to other steps like that.

Once your goals are set and you are working towards them, you will not have to worry anything unless any unknown situation comes up.

This is not all, as you are saving money towards your goal, you also need to understand investing so your save money can grow along the way. Learn investing basics here – Investing for Beginners: How to Avoid Common Mistakes & Grow Your Money

Complete Example

I hope you have understood how you can plan and work on that to achieve financial freedom.

Thank you for reading this article and keep investing.