- I’m obsessed with retiring early as a millionaire, but experts say I have work to do.
- To reach my goal, I must avoid lifestyle inflation and be more intentional with my spending.
- I also need a more detailed financial plan, and to get serious about investing for the long-term.
Ever since I turned 30, I’ve found myself obsessed with not only figuring out how to retire early, but how to do so as a millionaire. After spending the majority of my 20s without a personal finance strategy or a savings plan, I’ve not only had to work overtime to clean up some of my money mistakes but also stick to a strict budget to stay on track toward my goals.
While I now make monthly contributions to my SEP IRA retirement account and emergency savings account, try to limit debt intake, and invest in a diversified portfolio of stocks, bonds, and cryptocurrency, I wondered what else I should be doing, or stop doing, so I can retire early a millionaire. Here are the mistakes financial experts urged me to pay attention to so I can meet that lofty goal.
1. Stop winging your financial strategy
When I turned 30, I focused my goals on immediate changes I could make to clean up my finances. I changed my spending habits and created short-term strategies that would help me get out of debt. Even now, a lot of my financial plans are focused on how I can continue to grow my
in the next five to 10 years.
Financial planner Jason Dall’Acqua emphasized how important it is for me to stop winging my financial strategy and start mapping out plans for more long-term goals.
Rather than think just about how to afford my lifestyle today and in the next few years, Dall’Acqua advised me to think more holistically about what I want to achieve financially in the future and then to write out a plan so that I can hold myself accountable.
“Just like any other plan, your financial plan allows you to work backwards and determine the steps that you can start taking today to work toward your goals,” said Dall’Acqua.
2. Get serious about investing
As a relatively new investor, I felt pressure to start putting my money in stocks, bonds, and cryptocurrency, without much of a plan.
Financial planner Greg Meyer said that to retire a millionaire, it’s important to clean up your investment strategy.
Meyer advised me to make sure I’m not keeping too much of my retirement money in cash or low-yielding investments. When I checked, I realized that I was making that mistake.
“If retirement is on a long time horizon then you can afford to take more investment risk and have a higher percentage of your investments in equities,” says Meyer. “Having equity exposure is the best way to combat the effects of inflation over time.”
3. Be intentional with spending
Financial advisor Robert Johnson said that if retiring a millionaire is a primary goal of mine, I need to be careful about how I’m spending my money now.
Johnson said the most common mistake people make is letting their spending increase commensurate with their new salary.
For instance, people move into a bigger apartment or buy a more expensive car or home to reward themselves for receiving a raise. Then they’re unable to improve their financial condition because they spend everything they make.
“Act as if you didn’t receive the raise,” said Johnson. “That is, continue to live the same lifestyle you led before receiving a raise and invest the difference.”
I’ve been working on sticking to a strict budget, but this advice made me take a look at my spending and see what I could cut back on even more.
4. Avoid selling during market lows
Over the last few weeks, I’ve watched a lot of my investment accounts take a big hit as the market has been down. It’s made me wonder if I should sell off some of the stocks I have before they creep down even lower.
Financial advisor Matthew McKee said a big mistake people often make is selling during a time, just like right now, when the S&P 500 is falling.
“Avoid buying and selling during market fluctuations and stick to a dollar-cost-averaging strategy where you invest a certain amount on a regular basis based upon your retirement plan,” said McKee.
This strategy helps you avoid panic buying or selling, which could result in more money lost and negatively impact your retirement investment accounts.