We live in a society where we are constantly told to live for others, and to give more than we take. But what if you want to live for yourself?
This is the sentiment behind an article from millionaire personal finance expert Dave Ramsey that has resonated with many people. He argues that living like no one else means making your money work for you, not the other way around!
If you want to start on a path toward financial independence, you’ll need to live to save! Further, you’ll need to spend more time with people who are important to you and work on things that matter the most.
It’s not about living selfishly or thinking of yourself first; it’s simply a commitment to make your money work for you instead of putting in more hours at work or engaging in activities you don’t like just to earn money.
If you want to live for yourself by saving toward financial independence, keep reading.
What Does it Mean to Live Like No One Else?
Living like no one else means making your money work for you, not having to make decisions about how to work for money. It’s about facing choices and taking actions that make sense to you, instead of what might be best for someone else.
It’s a commitment to live by your own rules: spending time with loved ones or working on things that are meaningful to you – even if it means less free time or more stress.
If we want our lives to matter in this world, then living like no one else starts now!
It doesn’t mean being selfish either; everyone deserves their chance at happiness (and financial security). But the truth is many people believe they’re doing enough when really there’s plenty of room left for improvement. We just have so much potential waiting.
What Does Living for Yourself Accomplish?
By choosing to live for yourself, you accomplish so many things:
- You live on your own terms, instead of what might be best for someone else.
- You give more time to the people and projects that matter most to you.
- Your money works harder for you because it’s going towards the lifestyle you’ve always wanted.
- Finally, there is no limit to how much happiness or success one person can have in their lifetime!
The only thing holding us back from living like no one else is ourselves – so let’s get started!
How Much Money Do I Need to Reach Retirement Comfortably?
When thinking about how much money you need to reach a comfortable retirement, it can be difficult to figure out how much you need.
A popular rule of thumb is to save 25 times your annual salary, but it’s important to remember that this number does not take into account a whole host of factors including inflation, investment performance in retirement and the age at which you plan on retiring.
The best way to determine what amount of retirement savings will work for your needs is to sit down and create a financial plan aligned to your needs.
→ The First Step
While determining how much money you need may seem overwhelming, the first step is simple: track your spending habits in order to figure out where most of your monthly income goes.
Once you know this number, it’s possible that some changes could be made which would lead to greater savings over time.
For example, if eating out and food deliveries take up 20% of your salary each month, then you should consider finding ways to reduce the amount of money you spend on food by buying more groceries instead. This can improve your diet and your budget.
As another example, you might consider paying down your debt, especially high cost debt like past purchases you’ve yet to repay fully on your credit cards. You will want to eliminate this debt before you and live like no one else and be financially free.
Possibly even switch to debit cards altogether to avoid falling back into debt.
→ The Second Step
The second step for figuring out how much money you will need in retirement is to calculate the rate of return you want to achieve on your investments in order to determine how much money you should save.
Here are a couple examples:
If you think that you will need $1,000,000 for retirement, are 30, make $50,000 per year, have an expected annual inflation rate of two percent with a 9% return and want to retire at 60, then saving 18% per year could build up enough savings by the time that comes around.
A diversified portfolio of growth stocks can help you to meet these investment targets over longer periods of time. Continuing to invest during ups and downs in the market makes for a wealth building habit because you know you’re investing for your future needs.
On the other hand, if there is no anticipated inflation but instead a 7% average annual return over 35 years with a starting balance of $95,000 at age 30, then you won’t need to invest anything more.
This all anchors on your investment returns and the amount of money you think you’ll need to invest to get there. Realize that the investment goal will adjust with time and your lifestyle. What makes sense today might not make sense tomorrow.
Build in flexibility to your financial plan and work towards your shifting goals. This keeps up the likelihood of achieving your financial goals.
→ The Third Step
The third step is calculating what your living expenses might look like after retiring so as not to live beyond your means.
The Living Wage Calculator from MIT helps you calculate your living expenses by filling in a few details about the cost of living in your area. You can develop a sense for how much money you spend now and what might change after retirement.
Typically, most recommend taking your annual expenses and multiplying them by 80% to get a sense of how much money you’ll need in retirement.
As an example of how much money you’ll need in retirement each year, let’s say you currently spend $30,000 per year without taxes or retirement savings contributions included.
You want to retire at age 60 with a budget of roughly $25,000 per year post-retirement if your lifestyle costs stay constant through then.
Of note, this calculator, nor this rule of thumb, take into account any tax implications of withdrawing money from your tax advantaged investments. So, be sure to factor that in as well when calculating the best income replacement rate for yourself.
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How Can I Spend My Money in Retirement?
When thinking about how you can spend your money in retirement, consider the following:
- How do you want to spend your time in retirement?
- Which assets should I use my money on when living off a fixed income, like from Social Security or pensions?
Once you’ve figured out how much money you can comfortably afford each year in retirement, you’ll need to think about how to spend your money. They likely reflect many of the things to save up for during your working years.
You can spend some of the money on travel, hobbies, and other interests you might not be able to afford when working full time.
You will also need to consider how you will live in retirement for your health’s sake: if you’re an active person who loves being outdoors then this may mean spending less money than someone who prefers more sedentary activities indoors.
You should do what is right for yourself but it is important that you know you will need to plan ahead to have more money than just what your pension or Social Security checks offer. Most retirees will need to save enough money to live comfortably in retirement.
If you continue to invest your money consistently and in increasing amounts towards appreciating assets, you’ll have enough money in retirement to live the lifestyle you want.
Retirees may need to manage their money with a different perspective and by diversifying it across many assets and markets, you will have income security for life.
You can also supplement any sources of revenue by working part-time jobs if necessary. Jobs like being a freelance content marketing writer can add valuable income while allowing you to set your own schedule.
There are free stock investing apps that allow you to automatically invest in age- and risk-appropriate portfolios on your behalf.
This service also offers a comprehensive consumer banking feature, allowing you to have a bank account with a linked debit card to handle all of your consumer financial needs in one easy, convenient place.
How Do I Avoid Under-Spending in Retirement?
While seemingly hard to believe at this point in life, many choose to forego spending needs in retirement. They do this because they reason they might not need the money now, but they may in the future when they can’t return to work to earn more.
To avoid under-spending in retirement, you’ll need to adopt the good money habits of a millionaire. That doesn’t mean buying a luxury boat or travelling to 5-star hotels every month. A million dollars buys a lot less than it did 30 years ago after all.
Still, having a millionaire dollars in assets can still represent a significant financial achievement. Getting there might be easier thanks to inflation, but it still poses a challenge if not planned for accordingly.
Now, to become a millionaire, you need to live below your means, save more money than necessary for retirement and create an investment strategy that’s tailored to your financial goals.
Once you do this well and do this consistently, you should begin to notice how your financial security increases. With time and repetition, you’ll begin to notice you can abandon this scarcity mindset and begin living like no one else.
Setting aside regular and increasing amounts of money through investing apps geared towards beginners in low-cost index funds can get you there with confidence. These apps can track stocks and your investments to see how they perform over time.
Is It Time to Live Like No One Else?
Making decisions in your own best interest can create a life of happiness. Choosing to make money work for you is one decision that has untold benefits and the ability to deliver more enjoyment than ever before.
Don’t delay making this change in your life because it starts today. How will you start living for yourself?
About the Site Author and Blog
In 2018, I was winding down a stint in investor relations and found myself newly equipped with a CPA, added insight on how investors behave in markets, and a load of free time. My job routinely required extended work hours, complex assignments, and tight deadlines. Seeking to maintain my momentum, I wanted to chase something ambitious.
I chose to start this financial independence blog as my next step, recognizing both the challenge and opportunity. I launched the site with encouragement from my wife as a means to lay out our financial independence journey and connect with and help others who share the same goal.
I have not been compensated by any of the companies listed in this post at the time of this writing. Any recommendations made by me are my own. Should you choose to act on them, please see the disclaimer on my About Young and the Invested page.