I see finance as the most challenging part in our retirement journey (maybe because I don’t have a million of them yet.) In our current world, we still need some money no matter how frugal you are because this is how the system works. Beside money, we are now lacking of time to do anything and I think I will just take 5 minutes of your time to share what I think can improve your finance.
1. Calculate your total net worth
Spend 5 minutes to calculate how much have you accumulated over all your working years so far. If you still have debt (student loan/credit card bill/mortgage/other loan), you might be in negative net worth. For me, this is an easy exercise because all I need to do now is to look at my bank account and I can know my net worth immediately. Being aware of how much money I have helps me make better purchase decision and also my progress towards my retirement number.
Things could be complicated if you holds much more investment tools than me, but isn’t that a good news?
2. Get a free/profitable hobby
My hobbies used to be very expensive (at least according to my current standard). I spent a lot of money on buying book (but not reading enough of them), I also spent a lot on sport equipment like sport shoe, badminton racket/string, roller blade although I only play badminton fortnightly, run maybe once a month and I don’t know how the roller blade works.
After I get to know the blog of early retirement extreme, I get a few ideas from the blog about creating free (or profitable) and enjoyable hobby. Nowadays I spent more time reading than buying books (library is a great source), making full use of my running shoe now (run 2-3 per week), starting a blog (this one, it cost some money but I view it as a investment for me to learn about how to manage a blog as a business).
3. Get started at financial education
Property, stock, business, antique, painting, etc… There are so many investment choices available on the market now and it is confusing for me. I first learn about index fund through Mr Money Mustache blog and Early Retirement Extreme blog, it sounds like a reasonable choice t me. But I also agree with what is written by Jacob on his ERE blog about investment, we should understand investment enough first before we put in our hard earned money into it.
I have received many recommendations of books and online course about investment from few forum posts I posted. You might want to check them out if you are interested.
Although I start this post with things you can do in 5 minutes that helps your finance but I think every item listed above require time and effort to learn. I think the time line for me will be 5 to 8 years based on my current saving rate.
Let me know what you think is the next important thing during your retirement after you have taken care of your finance.