Retiring early. Doesn’t that sound nice? Being completely free from the constraints of money or the bank or work. There’s a whole movement of people working towards exactly that. The movement is called ‘FIRE’.
Somewhere deep inside we all want to retire early. Or at the very least work because you want to, not because you have too.
We take a look at the rising trend of people working towards FIRE, what FIRE means and how you can achieve it.
Financial Independence Retire Early
FIRE stands for Financial Independence Retire Early.
It’s a term coined for people who save extortionate proportions of their salary early on in order to live in financial independence later in life. They either retire early or work for satisfaction alone over money and stability.
The idea is to live as scaled back and frugally as possible early in life in order to save a high amount for your future.
Rather than the often-suggested 10% of your wage, FIRE savers are more likely to put away 60-80% every month.
There’s a growing number of FIRE success stories circulating on social media as of late. The movement became incredibly popular in America, but now we’re starting to see people using the FIRE tactics in the UK.
Many share their problems and their solutions online, with sites such as Reddit becoming a hub of FIRE expertise. The tips range from simply saving more per month to rearranging your entire life. One user asked:
‘What was your biggest sacrifice for FIRE? I’m considering moving to a lower cost-of-living city.’
The FIRE savers are citing a number of reasons as to why they’ve chosen to live a frugal life including fear of another recession, owing money to the bank and freedom to work in whatever job they want.
Ultimately, FIRE is the hardcore, long-term strategy to work towards financial freedom.
How To Become Financially Independent
Getting your finances in shape is a worthy cause, regardless of your end goal.
Whilst retiring in your 30s may be a little unrealistic, you can use some of the advice from the FIRE movement to become more financially independent.
Refine Your Budget
Those who practice FIRE have reduced their budget to the lowest possible cost. Make sure to track your spending and create a budget that pushes you to be more efficient with your money.
The less disposable income you take from your wage now, the more money you’ll have to put towards saving and investing. Which leads us nicely to…
Save and Invest
Saving is a huge part of the FIRE movement, with followers optimising their budget to maximise the amount of their salary that can be saved. But investing is equally important.
The compound interest from your investment portfolio will become a passive stream of income. Having sources of income other than your salary is a big move towards financial independence, as you’re less vulnerable to financial shock.
When it comes to investing time is just as valuable as money. So, if you don’t have a high-income that can support big investments without affecting your quality of life, investing early on can prove equally if not more fruitful.
If you think that you cannot save and invest because you still have debts to pay off, you’re wrong. Look at consolidating your high-interest debts and credit cards with a low interest loan to reduce the monthly repayments and overall cost.
Remember, FIRE is about focusing on the long-term.
Every time you pay off a debt, more money will be freed up to go into savings and investments.
It’s also important to save for an emergency fund even when you’re paying off debts. Otherwise a financial shock could stop you from making minimum payments or put you in more debt.
FIRE followers prove that it doesn’t matter what your current financial situation is, you just need to make small changes and consistently work towards your goals.
Set Yourself Realistic Goals (And Stick To Them)
Financial independence does not look the same for everyone. And so the goals you set must be uniquely tailored for you.
Set yourself short-term and long-term goals to work towards. Use the satisfaction of ticking off your smaller goals to fuel your fire and strive for the ones that are more of a challenge.
Is the Financial Independence Retire Early movement right for you?
You don’t have to move city to see the benefits of the FIRE movement.
Financial independence is all about taking complete control over your finances and optimising your spending to reach your personal goals.
Whether you optimise your budget, start building an investment portfolio or pay off your debts quickly, there’s a lot you can take from the FIRE movement without having to radically change your life.
And you never know, work it hard enough and you might just retire in your 30s after all.