Frugal living to retire early, it’s dead, simple frugality is the number one leading cause of early retirement. It’s not the only path. There are lots of paths, early retirement. So that’s why I made it for you. It was how I reached millionaire status by 24 tie. I was able to retire early extreme frugality and bring that into your business to be frugal in all areas. Your life, if you can embrace frugality, I promise you it’ll change your life and it’d be awesome.
If you gave me a thumbs up and if you’re new to my channel, please hit that subscribe button.. I’D really appreciate it. So when I talk about frugality being dead, simple and the extremely easy path to early retirement, what I mean is it’s 20 percent, maybe 15 20 percent knowledge and core principles and 80 to 85 percent psychological. It’s discipline it’s up in your head and so mastering the actual basics to personal finance, the extremely simple math behind early retirement. That’s the easy part. I’ve said that, before on my channel with the 4% is safe, withdraw rate and talking about how to save more than 50% of your income so gain that savings rate above 50%. The savings rate that I aspired to is around 85 to 88 percent. That allowed me to retire in basically under 5 years, which is something that I think is a bit extreme but attainable for pretty much. Anyone who makes the average North American salary so frugality in and of itself is it’s not enough. You need to still work full-time. You still need to bring in an average basic income, the early retirement, what I mean is it honestly is when I started in this journey. I believed that I had maybe some limiting beliefs around how you know money kind of worked. I believed that it was hard to get a raise at work. You know I had to work a whole year to get a 10 or 20 percent raise, and I was a high performer, so the average person has a very hard time increasing their income. They have a hard time, creating passive streams of income or even active streams of income, but everyone is in control of how they live their life and spend their money and for Galilee is a lifestyle choice. Just like early retirement is a lifestyle choice, and so it’s very important to embrace that and when you embrace that you’ll lead to the path of basically a happier wealthier life. So some of the things I want to talk around ferg ality, I’m gonna end. with some cool tips, about how you can actually really improve your your frugal skills, how you can get your spending way down and manage your budget much better, but I’m gonna talk about why? First, because you got to sell people on the Y before you give them the hell, and so why is it so important? Well, for one, if you look at some of the statistics, you’re gonna lead a happier life money problems, poor fiscal management, bad money management, bad spending problems are the number one leading cause of divorce and breakup.
So if you want to have a long, lasting relationship with your partner, you should probably embrace a little bit of frugality too you’ll realize that people whom are frugal they’ve done Studies on people who are very frugal. Let’s say they get a phone every three years. Instead of every year getting the latest and greatest phone, they appreciate that thing more. I appreciate my iPhone 7 more than someone else who I was an 8, because when I upgrade I know that I’ve spent a lot of time researching it. I made sure I got the best buy on it and when I do eventually upgrade to the newer and better thing, I’ve thought about that. I’ve spent a lot of time into that that purchasing decision and that’s what it’s about it being frugal, is about being efficient. With your spending and making conscious decisions in your consumption, it really lines the frugality movement aligns and the early retirement movement aligns with the minimalism movement. Having less is more it’ll free up your mental space, your mental ban bandwidth to do more and do better than having a house full of stuff right spending. Imagine if he didn’t go out shopping to the mall every Saturday, because by the way I was just at the mall recently and it was packed. There were teenage kids everywhere, buying clothes, shoes, the latest and greatest tech gadgets, and I’m thinking to myself I don’t spend any time shopping. I haven’t bought clothes in a year. I’ve been buying properties over a property a week, now nine properties in the last thirty days we’re going hard because I’m investing that time not in consuming, but in the act of con just consumption and good use of my time now. The reason I’m not gonna talk about the abundance mindset, the mindset that you’ll hear at the TEDx conference. I was just at in Miami there’s. This idea. You should just spend unlimited write blank checks as long as it’s growing your sales revenue as long as you’re you’re getting more income, but I think that’s a flawed approach for a couple of reasons, two reasons: one a dollar so grant uncle-ji.
I, like uncle G, he’s, got a ton of good stuff around growing, a successful sales, business and building a big business, but I don’t think he is very prudent about the bottom line, and so he talks about a dollar saved is a dollar. I think it’s actually more than that. A dollar saved is probably two to two and a half dollars earned because you, basically when you save a dollar, it’s an after-tax dollar, so you have to go, earn two dollars, so you say: I’m gonna save to spend ten bucks at Starbucks. Who cares? You have to go, make it 20 dollars to make that ten dollars net of tax in most cases, right plus they’re, here in Ontario, there’s 13 percent sales tax and everything you’re buying, so you’re being taxed at multiple layers, the more you consume, and so that’s why You know, for one saving has a really good impact on the amount you actually need to earn. So you could just have an easier life, make $50,000 a year and have the same net savings and net worth as someone who makes 75 or a hundred just by making conscious smart, consumptions and living frugally. So that’s why I’m talking about frugality and the second thing I promise two things. One was that a dollar saved is more impactful than a dollar earned. A dollar saved is worth two dollars earned, so you go save a hundred thousand from your bottom line. That’Ll have double the impact; in fact it has a double impact. For the second point, you actually need less to retire if you’re living on a budget. If your lifestyle requires a hundred thousand dollars a year in spending, let’s say you need to spend a hundred thousand dollars a year to keep yourself happy, because that’s where you’re you’re accustomed to and by the way the body acclimatize is to pretty much any environment. And so, if you were to cut out the Starbucks coffee, I promise you, you wouldn’t be any less happier. You would find a way to enjoy those Kevin O’Leary. 18 cent homemade coffees just the same. In fact, you might even be happier because you’re spending less time waiting in line at Starbucks to get that coffee and all things that go along to driving to the McDonald’s of the Starbucks, the Tim Hortons, to get those consumer goods and products. But you so because you need less, you save faster to early retirement and you need a lot less.
So if you’re spending a hundred grand a year, the 4% safe, withdraw rate or twenty five times your annual expenses is the number you need to hit. That means you need two and a half million dollars in net worth to be retired. So if you spend a hundred grand a year, you need two and a half million to retire. Let’s, let’s play these numbers a little bit a little bit less. Let’s say you could live on fifty thousand dollars a year. The average North American family spends forty nine thousand six hundred ninety bucks a year so right around the average North American family around forty nine thousand, almost fifty thousand, if you’re spending at that level, the average North American family needs about 1.25 million to be able to Withdraw from this portfolio for the rest of their lives for infinity, without ever touching the principle using the four percent safe withdrawal rate. So, just by cutting your spending from a hundred thousand to fifty thousand and by the way, you’re, not gonna, feel a deprivation going from 100 to 50. I live on like 25, but you can spend half back and if you could learn to spend half that if you’re spending already 100 look at how much money you’re gonna have to Invest and to build your net worth and to retire early and get out of that job. You don’t like or close down that company that you hate or get out of that situation, that you’re in because early retirement is not just sitting on a beach. You know. Reading a book and being bored, it’s so much more, it’s about doing whatever you want to do with your life. It’s about building companies if you enjoy doing that for a while, so about traveling, it’s about spending time with your children time with your family time with your friends, time and freedom of choice. That is what early retirement is all about to me and I think, to most people out there and that’s why everyone should really covet this early retirement dream, because it is literally whatever you want to do with your life. You can do that. It’s different for each person in everyone’s early retirement path is slightly different and everyone’s end result is also different, but the double punch of frugality is something that if I tell you to earn more or to maximize returns, there’s no double punch.
There there’s earned more and there’s maximise returns, but with frugality you save to retirement faster, you get there faster and you weigh less so if you were to cut your spending in that example, from a heart, fifty-thousand you’re now throwing an extra $50,000 a year at Your early retirement, its compounding and growing so that fifty thousand becomes a hundred thousand becomes to our thousand becomes a million dollars over time each and every year you save that plus. You need only 1.25 million to retire instead of 2.5, so you need half the retirement portfolio to retire. Now. Imagine you’d go on a quarter. You go from a hundred thousand spending down to twenty-five thousand with a house. Hacking situation say a duplex living situation, where some sort of architect is scenario where you rent a property and rent out other unused portions of that property. you can actually look at the average North American budget and cut because people are gonna, say: okay, I’m sold Mike. I need to get my spending down. I know it’s gonna have double the effect of earning another dollar by the way, IM still pro finding ways to pick up side, hustles and buy rental properties, and do all of these things you need to do to increase your earnings. I want you to get that promotion at work. If that’s gonna make you get to fire faster and make you happier, i want you to get that rental property, i’m here to encourage you to do that, and I of course want you to pick up those side hustles. If you know how to play piano, teach piano, if you you know, are a good driver, drive on uber cool. Do that make that extra money, but don’t compromise on your spending on your budget, because the end of the day, if you’re, making 100 you’re spending 100 you’re netting zero, nothing, you have a six-figure job and have nothing left over, and this is what a lot of People in North America are experiencing the next recession hits and they have no wealth, because they’ve spent everything, they’ve earned, they’ve wasted their life energy and I’m asking you to delay gratification just a little and invest in your future self, invest in your earlier retirement and invest Through frugality in yourself, so what are some tips? How do you actually go about doing that you’re on board? Now we I’ve kind of got you captivated to this point. You want to spend less you’re all about that. Frugality, cuz you’re! All about that earlier time.
In that freedom, lifestyle, the average North American budget, what does it look like we’re gonna throw something up on the screen right now, just kind of show you, the average North American budget, but I believe the average North American family spends about a third of their Income on housing and about another 25% on transportation, so over half of their spending is just on their accommodations, their transportation. I would try to encourage you to find a way to hack those situations down. Maybe you could carpool with someone. Maybe you could live closer and bike or walk to work. Maybe he had a transit pass and save some money, or maybe just maybe you could sell that car that you just bought last year and trade it in for an older model. That’s paid for that. Has no car payments, it’s really good! On gas, that’s gonna save you a ton of money in the transportation category. I spent around 1/5 what the average North American does on transportation. I have a great reliable car. Iva awesome Ford Focus. It’s the color gold, easy to find in a parking lot. It looks like the money mobi, all the gold brick, it cost me $2,000 so and the amount of gas I spend. I fill up. You know maybe once or twice a month – and I Drive quite a bit to my properties for 40 to 50 $60 a month and gas people are spending two three four hundred driving jeeps and SUVs. This is one way you could cut and it’s really really impactful. The next one is: is your housing so find a way to rent a chi bet? Videos about that, where you basically rent a place and rent out unused portions of that property to cover the rent, expense, get roommates, that sort of thing or you house, hat you buy a duplex. You buy a triplex, you rent out other portions of the property. Maybe you build a tiny house in the backyard if it’s legal in your municipality and you find a way to rent that out too. So you can create cash flow from unused portions of your property and that allows you to live for free. It’s what I’ve done for the last seven eight years, eight years now I have lived basically for free. In fact, I’ve been paid to live in some situations where I’m even making a little bit of money to spend towards food. The next one is food, and I’m gonna recommend the app called flip.
You can price match at places like superstore get student discounts, get points and then price match the cheapest loss leaders from all the Flyers. That’s a huge tip. Get your grocery budget cut in half big impactful items like you notice, I’m going from the largest impact on your budget, I’m starting with housing, transportation food then there’s entertainment, there’s things like Alcohol Tobacco. All these things that I mean if you’re smoking, go. It’s gonna kill you from a health perspective, don’t smell if you’re drinking find a way to drink economically. Maybe you make your own beer, maybe you partner with someone who makes their own beer and buy some of it at a low cost or your own wine. Maybe just cut back on the drinking altogether. Maybe you drink at home before you go out. These are all tips that I’ve practiced to keep my spending way down.. I most of my hobby is actually going hiking. My daughter and I like to go like skating, there’s free skating events all around the city. There are so many things you can do in winter or summer or fall that are free and it’s just spending time with people. It’s not something I really am a big fan of is trying to find frugal ways to basically save and there’s tons of their categories and areas on that budget. But if you focus on just those four or five items and really work on getting those expenses down, I guarantee you can shave your spending down in half and that’s gonna have a huge impact on you. You’Ll be able to retire instead of 50 years. Cutting your spending in half actually turns it down to about 17 years, so it has four times the effect you think it would have, you think, buy cut spending half you go from 50 years to retirement down to 25, but instead you go down to. Like 16 point something years and then again, if you could spend even half that, if you could save, you know 75% of what you’re earning. Maybe you live on half of your partner’s salary, save all of yours and save a part of theirs right. Then all of a sudden you’re getting to the 75 80 percent savings rate categories and in that area you’re gonna find you can retire in five six seven years depending on where you are right now, if you’re in a lot of debt right now, it might Take you seven eight nine years, but if you’re 20 years old right now with a little bit of debt, you can be retired at 29. you can retire to 35 at 39. The path is simple and fur gala tea For some people won’t work, some people want to spend their time efficiently and I’m having this mindset issue now, where you know do i, how do I spend my time? Because I don’t want a certain point: you get diminishing returns, which means basically, let’s say, I’m already – spending Tura dollars a month in food.
If I spend more effort to save ten dollars when that effort could have been spent to make me more money, you know it gets to a certain point where it doesn’t have any more impact, and my time is better spent or any more money But I think for most people in the beginning of their journey, you should really focus on that frugality The average person has a hard time increasing their earnings and if you’re, making 50 60 70 80 thousand dollars a year right now or less, you should be focused on frugality You don’t make enough money to say I can spend However, I want that I can spend and consume without any conscious thought you haven’t, earned that right I mean, if you’re, if you’re uncle-ji, making millions if your net worth is like 10 million right now, you can drive your SUV as a percentage of what your net worth is of your income You are being frugal You know if you’re, making 10 million dollars a year and you’re spending a million dollars a year, you’re still saving 90 percent of what you’re earning that’s pretty impactful if you’re saving 90 percent of what you’re earning I can’t fault you for spending a million dollars a year, because it’s all relative to the income that you’re bringing in people want that baller lifestyle they want to live rich when they’re poor What you find is, if you study people like Bill Gates or Warren Buffett They’Re rich, but they live like they’re Poor you’ll see Warren Buffett in line with a coupon for a coffee right, you’ll see Bill Gates, dressed in, like $50 clothes, a pair of jeans and a shirt That is how many of the ultra ultra wealthy live and that’s how they built massive amounts of wealth was not through consumption, but through astute saving and investing, as always, everyone the secret to unlocking a wealthier You is spending less earning more and maximizing returns Thank you smart! Oh you