The book Quit Like a Millionaire by Kristy Shen and Bryce Leung is a practical guide to achieving financial freedom and retiring early.
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Here are some takeaways from Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required.
Poverty
Kristy Shen grew up in poverty in China, developing a scarcity mindset for money. While the mindset holds some people back, Shen turned it into a power and gained financial independence.
Entitlement mindset
It’s a belief that one deserves special treatment. However, this mindset makes people dependent. Never rely on others for financial support; build your own safety net.
IOU = I Own You
If one is not careful about paying back debt, it can lead to serious problems in the future. In Chinese culture, owning debt is equivalent to the other person having power over you.
Early retirement
If one wants to retire early, they must save as much income as possible, notwithstanding how much money they make. It’s about making good investments and budgeting.
Budget that works for you
While budgeting, eliminate costs that make you unhappy, eliminate costs that affect you but you can get used to, reduce expensive things requiring maintenance and add a few splurges.
Bad investment
A house is a bad investment. For one, it costs money to maintain the house after buying it. Secondly, the price increases substantially if money is borrowed in the form of a mortgage.
Freedom mindset
Once basic needs are covered, spend not on useless things but on buying back time. It means investing so that surplus money covers basic expenses, giving you the freedom to quit your job.
4% rule
If the withdrawal rate (money required to cover basic expenses) is four per cent or less, then you’ll be able to become financially independent. It’s the “magic number” to retirement.
Cash cushion
It is money kept in high-interest savings accounts to mitigate the risks of a stock market crash. In an ideal scenario, the money should be enough to sustain for two years.
Bucket system
To create a financial safety net for retirement, allocate money to various accounts (buckets), including a portfolio, a cash cushion, and a current-year spending bucket.
Final thought
“The reality is that the world owes you nothing. You only become “special” by developing skills that are in demand, which takes focus, grit, and long-term work,” the book says.
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