By Mira Ma, CFP®, RFC®
You’ve got big dreams of saying goodbye to your boss, packing your bags, and traveling the world—all by the time you’re 50. If you’re going to retire earlier than most people, you need a bigger retirement nest egg than they do, which means you need to save a bigger portion of your income.
And if you’re not saving enough? If you’ve already reduced your spending to a minimum, you’ll need to look for ways to increase your income. Here are some ideas to give your savings a boost:
- Ask for a raise. You might feel trepidation about this option, but employers want to keep good employees. Plus the low unemployment rate gives you a bargaining chip. If your boss gives you the raise, don’t spend it. Put it toward your future journeys.
- Work overtime. If your employer pays for overtime, then take advantage of it. That time-and-a-half will add up fast.
- Get a side gig. Whether you take a part-time job, do consulting, or strike out on your own, the extra work can give a sizable boost to your goal of quitting the workaday world by 50. Plus you may develop some skills that help your career now or down the line.
If you don’t know what kind of work to take on, consider what you like doing or where your talents lay. For example, if you’re a computer programmer, you should be able to readily find people in need of your skills. Freelance sites such as Upwork will allow you to market yourself. Craigslist, too, can be useful—check out its Services and Gigs sections to see if they would help you.
As a benefit to owning a side business, you can also set up a solo 401(k) plan and contribute up to a whopping $54,000 per year (using 2017 contribution limits). That’s because you fund the plan as both employer and employee. (Make sure to talk with your financial advisor to determine if a solo 401(k) is a good option for you.)
- Write about what you know. Blogs, online magazines, and other content generators (such as About.com) need writers. You can share your career expertise or passions (for example, hiking tips) and earn money toward your future trip to Thailand.
- Barter for what you need: In the spirit of reducing expenses and thus increasing your income, you can barter for the services you need. For example, use your graphic design skills to get someone to do bookkeeping for you. You can use online barter exchanges to find other barter-friendly savers. Be aware, however, that the IRS considers the goods and services exchanged as income and will expect you to pay taxes on them.
- Become a landlord: Not only can rental income help you pack your bags while you’re young enough to travel, but it can provide a steady source of income when you return to the States.
- Invest in dividend stocks: Like rental income, dividend stocks can provide a regular, increasing source of income long after you’re done traveling. By itself, a dividend is usually small, but cumulatively, dividends add up. Do your research to make sure the companies you invest in are stable and have consistent dividend growth. This U.S. News and World Report article provides more tips.
- Earn royalties. Whether you’re an inventor or a writer, your product can earn you royalties—i.e., income—in the years to come.
You’ll have a better shot at quitting your job while you’re young if you take a two-pronged approach of cutting your spending and increasing your income. Whether you take an active approach via part-time work or a passive approach by writing a book, you can use the above ideas to help you boost your earnings. Like most people, you may be tempted to spend the extra money on current needs or wants. But by putting the extra money in your nest egg, you’ll be that much closer to traveling the world.